Which of the following are functions that the Federal Reserve Banks perform?

Question

Multiple select question.

Lending money to financial institutions

Setting reserve requirements and holding reserves

Setting taxation levels

Issuing currency

Answer 1

The functions that the Federal Reserve Banks perform from your provided options are:

1. Lending money to financial institutions - The Federal Reserve can lend money to banks and other financial institutions in times of need, typically through the discount window.

2. Setting reserve requirements and holding reserves - The Federal Reserve sets reserve requirements, which dictate the amount of funds that banks must hold in reserve and cannot lend out.

3. Issuing currency - The Federal Reserve issues the United States currency, which includes the paper bills used in circulation.

The option Setting taxation levels is not a function of the Federal Reserve; taxation is determined by the federal government and not by the Federal Reserve Banks.

So, the correct selections are:

• Lending money to financial institutions
• Setting reserve requirements and holding reserves
• Issuing currency