The Federal Reserve’s duties fall into four general areas:

• conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
• supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
• maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
• providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

The Federal Reserve System also:

• Conducts research on the U.S. and regional economies.
• Distributes information about the economy through publications, speeches, educational seminars, and web sites.

Note: The U.S. Department of Treasury's Bureau of Engraving and Printing prints paper money, while the Treasury’s U.S. Mint produces coins.

8.  What is the federal funds rate?

Just as an individual may deposit money into a bank, many banks deposit funds at the Federal Reserve. Such deposits are called “reserve balances.” The federal funds rate is the rate that banks charge each other for overnight loans of reserve balances. The federal funds rate is determined in the market by the demand for and supply of reserve balances.