60 The Fed Explained: What the Central Bank Does
Figure 4.6. Monitoring financial system stability requires global cooperation
What happens in the global economy can influence—sometimes greatly—the stability of the U.S. economy. Because
the U.S. dollar is a widely used global currency and because the world’s economies are interdependent, the Federal
Reserve works closely with central banks and other public authorities around the world to address international
financial issues and promote financial stability.
International authority/
deliberative body
Overview/Federal Reserve engagement
Financial Stability Board
Established: 2009
Location: Basel, Switzerland
Website: https://www.fsb.org
The Financial Stability Board (FSB), successor to the Financial Stability Forum, promotes stability
in the international financial system through enhanced cooperation among various national and
international supervisory bodies and international financial institutions. The Federal Reserve Board and
other U.S. agencies participate in FSB efforts, which specifically seek to coordinate the development
of regulatory, supervisory, and other financial sector policies.
Central banks
Established: 1668 or later
Location: Throughout the world
Website: https://www.bis.org/central_bank_hub_
overview.htm
Nearly all developed and developing nations maintain central banks to promote a sound and stable
financial system and well-functioning economies. Indeed, Federal Reserve officials engage regularly
and collectively with other central banks to discuss broad trends affecting the global financial system;
one-on-one bank engagement also occurs in special circumstances where coordination and coopera-
tion can help keep the global financial system operating smoothly.
Bank for International Settlements
Established: 1930
Location: Basel, Switzerland
Website: https://www.bis.org
The Bank for International Settlements seeks, among other things, to foster discussion and facilitate
collaboration among central banks and supports dialogue with other authorities that are responsible
for promoting financial stability. The Federal Reserve participates in the deliberations of this financial
organization, whose members include 60 member central banks, representing countries from around
the world that together make up about 95 percent of world gross domestic product.
G7 & G20
Established: 1975 (as G6)
Location: Varies by nation hosting
Website: Varies by nation hosting
The Group of Seven (G7) is an informal bloc of industrialized democracies (also including Canada,
France, Germany, Italy, Japan, and the United Kingdom) that meets annually to discuss global eco-
nomic issues. Federal Reserve officials engage regularly with the G7 and G20 to discuss macroeco-
nomic policy surveillance, the international financial system, and a wide range of policy issues, such as
development and policy proposals to encourage strong, sustainable, and balanced growth.
International Monetary Fund
Established: 1945
Location: Washington, D.C.
Website: https://www.imf.org
The International Monetary Fund (IMF) works to “foster global monetary cooperation, secure financial
stability, facilitate international trade, promote high employment and sustainable economic growth,
and reduce poverty around the world.” The Federal Reserve is a member of the International Monetary
and Financial Committee, which advises and reports to the IMF Board of Governors on the supervision
and management of the international monetary and financial system, including on responses to
unfolding events that may disrupt the system.
Organisation for Economic
Co-operation and Development
Established: 1961
Location: Paris, France
Website: https://www.oecd.org
The Organisation for Economic Co-operation and Development (OECD) promotes “policies that
will improve the economic and social well-being of people around the world.” The Federal Reserve
participates in several OECD forums to discuss current economic issues and projections for the global
economic outlook, and to promote policies that will improve global economic well-being.
World Bank
Established: 1944
Location: Washington, D.C.
Website: https://www.worldbank.org
The World Bank functions as a cooperative of 189 member countries. These member countries, or
shareholders, are represented by a board of governors, who are the ultimate policymakers at the World
Bank. Generally, the governors are member countries’ ministers of finance or ministers of develop-
ment. The Federal Reserve interacts informally with the World Bank, largely through the International
Monetary Fund.