What is the key role of the Federal Reserve System?

The Federal Reserve System, often referred to simply as the Fed, plays a crucial role in regulating the U.S. monetary and financial system. Its primary functions include conducting monetary policy, supervising and regulating banks, maintaining financial stability, and providing banking services to depository institutions and federal government entities.

By adjusting interest rates and influencing money supply, the Fed aims to promote maximum employment, stable prices, and moderate long-term interest rates. This regulatory oversight helps to ensure a stable and effective financial system, which is vital for the overall health of the economy.

In contrast, controlling the tax system is the domain of the Internal Revenue Service (IRS) and the Department of the Treasury, while the enforcement of national laws falls under the purview of various federal and state law enforcement agencies. Additionally, while the Fed may engage in foreign transactions, its primary focus is not to provide loans to foreign countries but to manage domestic monetary policy and contribute to economic stability.