April 21, 2024 

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HARROD-DOMAR MODEL: A model economic growth developed by R. F. Harrod and E. D. Domar that seeks to explain why an economy would not grow as fast has its potential growth rate. This model is based on the notion that actual income determines the amount saving, which is determines investment, which is what affects the rate of economic growth. If saving is not enough, the potential growth rate will not be achieved. The Harrod-Domar model, developed in the 1930s, has a strong Keynesian economic flavor, both indicating that the economy does not automatically achieve its potential.

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A collection of 25 government banking institutions that are part of the U.S. Federal Reserve System and which support the activities of the 12 Federal Reserve District Banks that supervise, regulate, and interact with commercial banks as they carry out the policies established by the Federal Reserve Board of Governors. Federal Reserve Banks, both District and Branch, are often termed bankers' banks in that they provide banking services to commercial banks. The 37 separate banks--12 District Banks and 25 Branch Banks--spread across the country are what help make the Federal Reserve System a decentralized central bank.
Federal Reserve Branch Banks, 25 in total, are the supportive branches of 12 Federal Reserve District Banks. Much like commercial banks have branch operations that assist in the provision of services to customers, 10 of the 12 Federal Reserve District Banks also have branches that assist the efforts. While the term Federal Reserve Banks is often used ONLY in reference to the District Banks, it really applies to all 37 Banks that make up the Federal Reserve System, including 25 Branch Banks.

All Federal Reserve Banks, District and Branch, provide banking services to commercial banks, regulate commercial banking activity, process checks and other payments, provide banking services for government agencies, collect and analyze economic data, and undertake a host of other activities.

Federal Reserve Pyramid
Federal Reserve Banks
The exhibit to the right, commonly termed the Federal Reserve pyramid, indicates the connection between Federal Reserve Banks and the rest of the Federal Reserve System. The 37 Federal Reserve Banks (12 District Banks and 25 Branch Banks) form the middle of the pyramid, essentially functioning as the go-between the Board of Governors and commercial banks. The Fed Banks are largely responsible for supervising, regulating, and interacting with commercial banks and carrying out the policies established by the Federal Reserve Board of Governors.

Districts and Branches

The 12 Federal Reserve Districts are governed by District Banks. The District Banks are the principal players in the Federal Reserve network of banks. These 12 Fed Banks are where most of the day-to-day Federal Reserve System, central banking action takes place. In addition to the city, each District is also commonly designated by number and/or letter. From 1 to 12, A to L, the 12 banks are 1-A, Boston; 2-B New York; 3-C, Philadelphia; 4-D, Cleveland; 5-E, Richmond; 6-F, Atlanta; 7-G, Chicago; 8-H, St. Louis; 9-I, Minneapolis; 10-J, Kansas City; 11-K, Dallas; 12-L, San Francisco.

The 25 Federal Reserve Branch Banks exist to assist their parent District Banks in their assigned duties. Should a commercial bank need Federal Reserve services, it can contact its nearby Branch Bank rather than a more distant District Bank. Branch Banks generally do not provide the entire range of services of District Banks (much like the branch of a commercial bank provides scaled down services) and they are subservient to their District Banks.

Ten of the Federal Reserve Districts contain Branch Banks. Only the Boston and Philadelphia districts have no Branch Banks. Branch Banks tend to be more numerous in the less densely populated, larger Federal Reserve Districts in the west and South.

Cities containing the 25 Branch Banks, grouped according to their District Bank cities are: Boston (no Branch Banks); New York (Buffalo); Philadelphia (no Branch Banks); Cleveland (Cincinnati, Pittsburgh); Richmond (Baltimore, Charlotte); Atlanta (Birmingham, Jacksonville, Miami, Nashville, New Orleans); Chicago (Detroit); St. Louis (Little Rock, Louisville, Memphis); Minneapolis (Helena); Kansas City (Denver, Oklahoma City, Omaha); Dallas (El Paso, Houston, San Antonio); and San Francisco (Los Angeles, Portland, Salt Lake City).

Administrative Structure

The administrative structure of each of the 25 Federal Reserve Branch Banks is much like that of commercial banks. Each has a board of directors that supervises the overall operation, including the appointment of administrative officers. The board includes 5 or 7 members that are appointed either by the parent District Bank or the Board of Governors in Washington, D.C.


Federal Reserve Branch Banks support the efforts of District Banks as they provide the operating link between the policies of the Federal Reserve System and commercial banks. Commercial banks have very little contact with the Board of Governors in Washington, D.C., but they do work with their nearby Federal Reserve Bank. While a number of Federal Reserve Bank activities are directed at commercial banks, they also provide services to government agencies and the general public. Among the key functions of Branch Banks are:
  • First, as the bankers' bank, Federal Reserve Banks provide important banking services to commercial banks. Fed Banks process checks and other electronic payments, distribute paper currency and metal coins, maintain deposits for commercial banks, and extend reserve loans to commercial banks. While private companies also provide payment processing services, the vast majority of check and electronic payments for the economy are handled by the network of 37 Fed Banks.

  • Second, Federal Reserve Banks provide regulatory oversight of commercial banks. They track the assets, liabilities, loans, deposits, and reserves of commercial banks to ensure that Federal Reserve regulations are followed. Fed Banks are responsible for inspecting the books of member banks through onsite, field examinations.

  • Third, Federal Reserve Banks act as the fiscal agent for the U.S. Treasury and other government agencies. They maintain checking accounts which government agencies use to pay their bills. Fed Banks also handle the sale of U.S. Treasury securities and savings bonds for the Treasury Department. Commercial banks, institutional investors, brokers, dealers, even the general public can purchase newly issued Treasury securities through their nearby Federal Reserve Bank.


Recommended Citation:

FEDERAL RESERVE BRANCH BANKS, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2024. [Accessed: April 21, 2024].

Check Out These Related Terms...

     | monetary economics | monetary policy | central banking | Federal Reserve pyramid | Board of Governors, Federal Reserve System | Chairman of the Board of Governors, Federal Reserve System | Federal Reserve District Banks | Federal Reserve Banks | Federal Open Market Committee | Federal Advisory Council | open market operations | discount rate | reserve requirements |

Or For A Little Background...

     | fractional-reserve banking | banks | money | bank reserves | bank panic | business cycles | check clearing | money creation | macroeconomics | traditional banks |

And For Further Study...

     | Federal Deposit Insurance Corporation | Comptroller of the Currency | monetary aggregates | barter | aggregate market | unemployment | inflation | bank balance sheet | gross domestic product | circular flow | goldsmith money creation |

Related Websites (Will Open in New Window)...

     | Federal Reserve System |

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