Funding for the operations of the Board of Governors of the Federal Reserve is derived from
A) taxes collected from commercial banks.
B) the governments of the states in which the district banks operate.
C) appropriations from the United States Congress.
D) earnings of the Federal Reserve district banks.

Question

Quizplus · Accepted Answer

The Federal Reserve's operations are primarily funded through interest on government securities that it has acquired through its open market operations. Other sources of income include interest on foreign currency investments, interest on loans to depository institutions, and fees for services (such as check clearing and fund transfers) provided to these institutions. This income is used to cover operating expenses and to pay dividends to member banks; the remainder is turned over to the U.S. Treasury. This system makes the Federal Reserve independent from direct Congressional funding, allowing it a degree of operational autonomy from the political process.

Funding for the Operations of the Board of Governors of the Federal