Money & Banking | Three Functions of The Federal Reserve System / Central Bank

Describe the three functions of the Federal Reserve System / Central Bank.

Possible Answer: The three functions of the Federal Reserve are acting as the government’s bank, acting as the bankers’ bank, and controlling the money supply. As the government’s bank, the Fed produces the nation’s paper currency and lends money to the government. As the bankers’ bank, the Fed loans money to member banks and provides storage of funds. The Fed is responsible for managing the nation’s economic growth by managing the money supply and interest rates.

Source: Business Essentials, 8e (Ebert/Griffin) – Global Edition