What is the role of the Federal Reserve?

The role of the Federal Reserve is primarily to issue currency and regulate the money supply, which is fundamental to maintaining the stability of the financial system and the economy. As the central bank of the United States, the Federal Reserve manages the nation's monetary policy by controlling interest rates and influencing the availability of credit. This activity helps to ensure economic stability and aims to manage inflation and employment levels effectively.

By issuing currency, the Federal Reserve provides the essential money needed for transactions in the economy. Additionally, regulating the money supply involves using various tools, such as open market operations and reserve requirements, to either expand or contract the amount of money circulating in the economy. This is crucial for controlling inflation rates and supporting overall economic growth.

While other options mention important financial aspects, they do not accurately describe the primary function of the Federal Reserve. Taxation is handled by the federal government and the IRS, oversight of private banks encompasses a broader regulatory framework that extends beyond just the Federal Reserve, and while the Federal Reserve can influence fiscal policy through its monetary policy, it doesn't directly set national fiscal policy, which is typically determined by Congress and the executive branch.