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Each of the 12 Reserve Banks supervises and regulates bank holding companies and state chartered banks in its District that are members of the Federal Reserve System. Each Reserve Bank also provides services to depository institutions in its District and functions as a fiscal agent of the U.S. government. The services the Banks perform include putting coin and currency into circulation; electronically transferring funds; selling Treasury notes, bills, and bonds; processing savings bonds, and redeeming food stamps.
The New York Fed serves the Second Federal Reserve District, which encompasses New York State; the 12 northern counties of New Jersey; Fairfield County, Connecticut., Puerto Rico, and the Virgin Islands. Though it serves a geographically small area compared with those of most other Federal Reserve Banks, the New York Fed is the largest Reserve Bank in terms of assets and volume of activity.
The New York Fed has a branch office in East Rutherford, New Jersey. The Fed's state-of-the-art operations center in East Rutherford, which opened in 1992, processes cash for the metropolitan New York and New Jersey area.
Unique Domestic Policy Functions
At the direction of the FOMC, the Federal Reserve's top monetary policy-making group, the New York Fed executes domestic open market operations on behalf of the System. Open market operations—the buying and selling of U.S. government securities in the secondary market—are the principal means through which the System implements monetary policy. Although the FOMC decides what policy to follow, the System's portfolio is directed, on a daily basis, by the Manager of the System Open Market Account at the New York Fed. The Manager, along with the rest of the Open Market Department, constantly monitors bank reserves and acts to ensure that the FOMC's directive is being fulfilled.
The FOMC is composed of the seven Board governors and five of the 12 Reserve Bank presidents, and meets eight times a year in Washington, D.C. The president of the New York Fed is a permanent voting member of the FOMC and traditionally is selected as its vice chairman. The other presidents serve one-year terms on a rotating basis. All of the presidents participate in FOMC discussions, but only the five who are members of the Committee vote on policy decisions.
Unique International Functions
The New York Fed also is responsible for maintaining relations with, and providing financial services for, foreign central banks and international organizations. One of these services is the New York Reserve Bank's unique custodial responsibility for the gold reserves of various countries, central banks and international organizations.
Foreign official gold reserves have been held at the New York Fed since 1924 for numerous reasons, including the stability of the U.S. political system, the concentration of international trade and finance in New York City, and the convenience of centralizing gold holdings in a place where international payments can be made quickly.