The Federal Reserve System Has 12 Regional Banks, Plus the Board in Washington
The Federal Reserve System — the central banking system of the United States — consists of 12 regional Federal Reserve Banks spread across the country, plus the Board of Governors in Washington, D.C. These are not commercial banks where you open a checking account. They are banks for banks, handling the money supply, interest rates, and financial stability for the entire nation.
Each of the 12 regional banks serves a specific geographic district. The Federal Reserve Bank of New York, for example, covers New York, New Jersey, Connecticut, and Puerto Rico. The Federal Reserve Bank of San Francisco covers nine western states and territories. These regional banks are not government agencies — they are private corporations owned by the commercial banks in their districts — but they operate under a public charter and answer to Congress.
If you are looking for a place to deposit money or get a loan, you will not use a Federal Reserve Bank. You will use a commercial bank, credit union, or savings bank. The Federal Reserve Banks work behind the scenes, managing the banking system itself.
Key Takeaways
- The Federal Reserve System has 12 regional banks plus a Board of Governors in Washington, D.C., for a total of 13 main entities.
- Federal Reserve Banks are not consumer banks — they do not take deposits from individuals or offer personal loans.
- Each regional bank serves a specific geographic district and handles banking operations for commercial banks in that area.
- The Federal Reserve sets interest rates, manages the money supply, and oversees the stability of the banking system.
- Commercial banks, credit unions, and savings institutions are separate from the Federal Reserve and are where consumers bank.
The 12 Regional Federal Reserve Banks and Their Districts
The 12 regional banks are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Each one covers a multi-state region and operates branch offices in major cities within its district.
The New York Federal Reserve is the largest and most visible. It handles open market operations — the buying and selling of government securities that control the money supply — and it is the banker for the U.S. Treasury. The other 11 regional banks handle check clearing, wire transfers, currency distribution, and supervision of banks in their districts.
These regional banks are not branches of a single national bank. Each is a separate corporation with its own board of directors, though all operate under the oversight of the Board of Governors in Washington. This structure was designed to balance central control with regional input — the idea being that a bank in Atlanta understands the economy of the Southeast better than a single office in the capital could.
What Federal Reserve Banks Actually Do
Federal Reserve Banks manage the plumbing of the banking system. When you write a check to someone at a different bank, a Federal Reserve Bank clears it — it moves money from your bank's account to the other bank's account. When banks need to borrow money overnight to meet their reserve requirements, they borrow from the Federal Reserve at the discount rate.
The Federal Reserve Banks also distribute currency and coins to commercial banks. If your bank runs low on cash, it orders from the Federal Reserve. The regional banks receive worn-out bills, shred them, and order new ones from the Bureau of Engraving and Printing.
Federal Reserve Banks also supervise and examine banks in their districts to make sure they are following the law and managing risk responsibly. This is a regulatory function — if a bank is taking too much risk or breaking rules, the Federal Reserve can order it to change its practices.
The Board of Governors in Washington
The Board of Governors sits in Washington, D.C., and sets policy for the entire Federal Reserve System. The board has seven members, including the Chair and Vice Chair, all appointed by the President and confirmed by the Senate. The Chair of the Federal Reserve is one of the most powerful economic officials in the U.S. government.
The board sets the federal funds rate — the interest rate that banks charge each other for overnight loans. This rate influences all other interest rates in the economy: mortgage rates, car loan rates, credit card rates, and savings account rates all move in response to changes in the federal funds rate.
The board also sets reserve requirements (the amount of money banks must keep on hand), supervises large banks, and works with Congress and the President on economic policy. During the 2008 financial crisis and the 2020 pandemic, the Federal Reserve took extraordinary actions — buying trillions of dollars in securities and lending money directly to businesses — that required board approval.
How the Federal Reserve Differs From Commercial Banks
A commercial bank — like Bank of America, Wells Fargo, or your local community bank — takes deposits from customers, makes loans to businesses and individuals, and tries to make a profit. You can walk into a commercial bank and open an account.
A Federal Reserve Bank does none of that. It does not take deposits from individuals. It does not make loans to consumers. It does not try to maximize profit. Instead, it serves the banking system and the public interest by keeping the financial system stable and the money supply healthy.
Commercial banks hold accounts at Federal Reserve Banks, the way you might hold an account at a commercial bank. When the Federal Reserve raises interest rates, commercial banks pass that increase along to their customers. When the Federal Reserve lowers rates, commercial banks typically lower theirs too.
Why the Federal Reserve Was Structured This Way
The Federal Reserve was created in 1913 after a series of financial panics in the late 1800s and early 1900s. Congress wanted a central bank — something most other developed countries already had — but Americans were suspicious of concentrated financial power in one place.
The compromise was a system with both central authority (the Board of Governors) and regional representation (the 12 regional banks). Each regional bank has a president who is elected by the banks in that district, giving commercial banks a voice in how the Federal Reserve operates. This structure was meant to prevent any single region or group of banks from dominating the system.
Over time, the Board of Governors has become more powerful relative to the regional banks, but the 12-bank structure remains. The regional banks still matter — their presidents sit on committees that influence policy, and they handle the day-to-day operations that keep the banking system running.
Frequently Asked Questions
Can I open an account at a Federal Reserve Bank?
No. Federal Reserve Banks only serve other banks, the U.S. Treasury, and foreign central banks. To open a checking or savings account, you need a commercial bank, credit union, or savings institution. Your local bank holds an account at the Federal Reserve, but you cannot.
Is the Federal Reserve a government agency?
The Federal Reserve is a hybrid. The 12 regional banks are private corporations owned by commercial banks, but they operate under a public charter and answer to Congress. The Board of Governors is a government agency. The entire system is designed to be independent from day-to-day political pressure while remaining accountable to the public.
What happens if a Federal Reserve Bank fails?
A Federal Reserve Bank has never failed. Because they do not take deposits from the public and do not make risky loans to consumers, they do not face the same risks as commercial banks. The Federal Reserve can also create money if needed to keep itself solvent, which commercial banks cannot do.
Do all 12 Federal Reserve Banks have the same power?
No. The Federal Reserve Bank of New York is significantly more powerful than the others because it handles open market operations and serves as the banker for the U.S. Treasury. The other 11 regional banks have important roles in their districts but less influence over national policy.
How is the Federal Reserve different from the FDIC?
The Federal Reserve manages the money supply and banking system. The FDIC (Federal Deposit Insurance Corporation) insures deposits at commercial banks up to $250,000 per account. They work together but have different jobs — the Federal Reserve prevents financial crises, and the FDIC protects individual depositors if a bank fails.