The part of the Federal Reserve’s work most visible to the American public is our role in circulating cash throughout the economy, both currency and coinage. We ensure that financial institutions have enough physical currency on hand to satisfy the public’s demand, even if that demand spikes.
While we don’t “print money”—that’s the Bureau of Engraving and Printing and the US Mint—we do distribute currency and monitor its physical state. Every bill is sent out first from a Reserve Bank, then eventually comes back from its rounds. We look at each bill to decide whether it’s physically fit to make another trip. If not, we destroy it and send a new bill out in its place.
When you look at a dollar bill, you’ll see a stamp on one side with a letter within a “starburst” pattern. That letter tells you which Reserve Bank released the bill into the economy the first time. If you see a “D,” that means we at the Cleveland Fed sent it out when it was new.
Managing payment transactions for the US Treasury
The US Treasury needs a bank, just like individuals, to manage the flow of money in and out of its coffers. The Federal Reserve, simply put, serves as the nation’s bank, and one part of that service is managing payments for the Treasury.
- Hundreds of billions per year: Our computer systems channel digital payments of more than 299 million transactions valued at over $770 billion. You may encounter these systems directly through our website, pay.gov, if you make payments to the Veteran’s Administration, for example, or pay for something in a park run by the National Parks Service.
- Join our ranks of technologists: Designing and building these critical systems requires deep technology skills, so in addition to its many other roles, the Cleveland Fed is a sophisticated technology company, on par with any in Silicon Valley.
Keeping banks and other financial institutions safe and sound
Less apparent to the public at large is our role in working with banks and other financial institutions to make sure that they comply with banking law, that they’re creditworthy to borrow money (just like people), that they file all the forms they’re required to file, and that the financial system is safe from digital attacks.
Supervision and regulation: Ensuring that financial institutions follow legal requirements
The Cleveland Fed supervises approximately 270 financial institutions headquartered in our district to ensure they operate in a safe and sound manner, provide fair access to credit, and comply with laws, regulations, and mandates. Supervised financial institutions include state member banks, savings and loan companies, and bank holding companies.
There are other federal agencies, such as the FDIC (“Federal Deposit Insurance Company”) and the OCC (“Office of the Comptroller of the Currency), that watch over other institutions that the Fed doesn’t.
Banks and other financial institutions within our district may always choose to join the Cleveland Fed, that is, they become “member banks,” and as such they buy an ownership stake in our private, non-profit organization.
Ensuring that financial institutions can borrow money
Just like individuals, organizations must borrow money. In the case of financial institutions, they may need to borrow money overnight from the Fed to maintain the reserves they must have on hand by law. Through its “Discount Window,” the Cleveland Fed ensures that the financial institutions we regulate are creditworthy when they need to borrow money.
Filing the paperwork
Financial institutions must file certain reports regularly by law. The Cleveland Fed works with financial institutions within our district to file their required reports. We maintain this data, so that we can better monitor the overall health of the financial system.
Watching for threats to the financial system
We have a special unit dedicated to monitoring threats to the financial system. If we recognize one, we inform banks of it, so that they can protect themselves.