The power to issue bank notes was taken away from national banks and turned over to the Federal Reserve banks. The Fed has the right to buy and sell government securities, extend loans to member banks, clear checks, and to require that member banks hold reserves equal to a specified fraction of their total deposits. The Fed does not typically deal with the public directly. It can be thought of as the bankers bank. The Federal Reserve banks are the bankers to the federal government.
Reserve banks make loans to member banks.
The interest rate they charge the member banks is called the discount rate. The discount rate is the way that the Fed can increase reserves in the banking system. Member banks must own stock in the Fed Reserve bank in their district. This stock ownership entitles them to a dividend and a vote for the Board of Directors from their Federal Reserve district. The Federal Reserve Board was renamed the Board of Governors during FDR s presidency and they were now responsible for setting and implementing the nation s monetary policy.