ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In establishing the Federal Reserve System, the United States was divided geographically into 12 Districts, each with a separately incorporated Reserve Bank.

Detailed explanation-2: -The Reserve Banks are decentralized by design and are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

Detailed explanation-3: -The FOMC consists of 12 voting members-the seven governors, the president of the Federal Reserve Bank of New York, and four of the 12 Reserve Bank presidents who serve one-year terms on a rotating basis.

Detailed explanation-4: -The Federal Reserve system was set up with 12 regional banks due to traditional American hostility to centralized authority and central bank, such a system was setup to diffuse the power and distribute it much more evenly. Reserve Banks are the working arms of the national bank.

Detailed explanation-5: -It is run by seven members, or “governors, ” who are nominated by the President of the United States and confirmed in their positions by the U.S. Senate.