What is the primary role of the Federal Reserve?

The primary role of the Federal Reserve is to control monetary policy in the United States. This encompasses managing the country's money supply and interest rates to promote economic stability, influence inflation, and adjust employment levels. Through various tools such as open market operations, the discount rate, and reserve requirements, the Federal Reserve can influence liquidity in the financial system, stabilize prices, and maintain maximum employment.

While regulation of federal trade practices, issuance of government bonds, and management of foreign currency exchanges are essential functions in the broader economic and financial system, they do not capture the central and most critical function of the Federal Reserve. Its focus on monetary policy directly impacts economic growth and stability, making it a foundational component of the U.S. financial system.