Federal Reserve Definition. The Federal Reserve, or Fed, is the Central Bank of the United States. It was established in 1913 when Congress passed the Federal Reserve Act. The Act defines the role of the Fed is "to furnish an elastic currency, to afford the means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes." Duties include conducting monetary policy, regulating banking institutions, protecting consumer rights, maintaining stability in the banking system, and providing banking services to the U.S. Government. The Fed fulfills its mission through a network of twelve banks, known as "District Feds". These banks help carry out operations, including controlling the money supply and regulating member banks. The twelve District Feds are headquartered in Boston, New York, Philadelphia, Cleveland, St. Louis, San Francisco, Richmond, Atlanta, Chicago, Minneapolis, Kansas City and Dallas. These banks implement the policies of the Federal Reserve Board and also carry out economic research. The Board consists of a Governor and four other regular members.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.