Federal Reserve Bank of Philadelphia

What Is the Federal Reserve Bank of Philadelphia?

The Federal Reserve Bank of Philadelphia is part of the broader Federal Reserve System (FRS) that is charged with creating and executing U.S. monetary policy. It also supervises banks and related financial institutions in its region and provides financial services to area depository institutions and the federal government.

The region it covers is known as the Third Federal Reserve District, and includes eastern Pennsylvania, southern New Jersey, and Delaware. The Federal Reserve Bank of Philadelphia is also referred to as the Philadelphia Fed.

Understanding the Federal Reserve Bank of Philadelphia

The Philadelphia Fed is one of 12 regional Federal Reserve Banks that carry out monetary and banking policy on behalf of the Federal Reserve Board. It covers the Third District, which consists of eastern Pennsylvania, southern New Jersey, and Delaware. 

The Federal Reserve System is the central bank of the United States, and acts as the federal government's bank. Commonly referred to as the Fed, it is composed of 12 regional Reserve Banks, including the Federal Reserve Bank of Philadelphia, and the Board of Governors in Washington, D.C. The legal mandate of the Fed is to create financial conditions that support and encourage economic growth.

In practice, the Fed is responsible for conducting domestic monetary policy, supervising and regulating financial institutions, providing banking services for the U.S. Treasury Department, and operating an efficient payments network.

Characteristics and Organization

Like the other 11 Reserve Banks, the Federal Reserve Bank of Philadelphia is supervised by a nine-person board of directors. The board of directors is selected to represent a variety of interests within the district. As such, directors have backgrounds in the banking, commercial, agricultural, industrial, consumer, labor and public interest sectors.

The board of directors is responsible for oversight of the Philadelphia Fed's direction and performance, and also contributes to the creation of monetary policy of the nation as a whole through reports on economic conditions in the Third District. The president of the Federal Reserve Bank of Philadelphia, along with the presidents of the other banks and the seven governors of the Federal Reserve Board, meet regularly to discuss the economy and monetary policy. This group is referred to as the Federal Open Market Committee (FOMC).

Patrick T. Harker took office on July 1, 2015, as the 11th president and chief executive officer of the Third District, Federal Reserve Bank of Philadelphia. In 2020, he serves as a voting member of the Federal Open Market Committee.

Image by Sabrina Jiang © Investopedia 2020

Notable Activities of the Federal Reserve Bank of Philadelphia

The Federal Reserve Bank of Philadelphia regulates the banks within its territory, provides cash to banks within its district, and monitors electronic deposits. In addition, the Philadelphia Fed is the main hub for the Legacy Treasury Direct system. This is an electronic record-keeping system that issues and houses Treasury securities that investors purchase directly from the United States Treasury.

The Philadelphia Fed's Treasury Services Department also maintains the system that manages the checkbook of the United States Treasury Department. The Philadelphia Fed Manufacturing Business Outlook Survey is an important report issued by the Philadelphia Fed. This report tracks manufacturing activity in the Third District, and is often used as an indication of manufacturing conditions nationwide. The Philadelphia Fed also conducts and publishes a similar Nonmanufacturing Business Outlook Survey.