The Board of Governors, located in Washington, D.C., is a federal government agency. It consists of seven members appointed by the president and confirmed by the Senate for staggered 14-year terms. The chairman and vice chairman are designated by the president, with Senate approval, for four-year terms (renewable during their Board-member terms).

The Board of Governors regularly reports to Congress, giving an annual report on operations and semiannual reports on the state of the economy and the Fed’s objectives for the growth of money and credit. The chairman meets regularly with the president and the secretary of the Treasury. Board members testify frequently before congressional committees and meet frequently with the president’s Council of Economic Advisers and other key economic officials.

Board members participate in formulating monetary policy, along with Reserve Bank presidents, through the Federal Open Market Committee. The Board has sole responsibility for setting reserve requirements for depository institutions and approves discount rate changes proposed by Reserve Bank directors.

The Board establishes and administers financial safety and soundness and consumer protection regulations and administers regulations regarding bank consolidation. The Board also oversees Reserve Banks’ services to depository institutions, bank supervision functions, and accounting procedures and approves Reserve Banks’ budgets.