The FOMC is charged under law with overseeing open market operations,
the principal tool of national monetary policy. These operations affect the
amount of Federal Reserve balances available to depository institutions,
thereby influencing overall monetary and credit conditions. The FOMC also
directs operations undertaken by the Federal Reserve in foreign exchange
markets.
The FOMC is composed of the seven members of the Board of Governors
and five of the twelve Reserve Bank presidents. After it pays its expenses, the
Federal Reserve turns the rest of its earnings over to the