The 12 Federal Reserve Banks serve specific districts nationwide. These banks act as banks for other banks. They provide similar services to banks as regular banks do for businesses and individuals. The Fed processes millions of dollars in payments. Payments made by checks and electronic transfers are a part of this process. Another service it provides to banks or financial institution is clearing checks. Clearing checks can take up to two days to process. This is so because of the travel that th

When the Federal Reserve Act was passed many people were fearful of the thought of a centralize bank. The system was set up with a variety of functions and a number of checks and balances to decentralize it somewhat and it has worked. With its variety of functions the Federal Reserve System has managed to help ensure a sound banking system and a healthy economy.

e check has to do. When the payee receives the check it gets deposited into their bank, the bank in turn sends it to the Fed or local clearinghouse to receive payment. The Fed sends the check to the payer?s bank. The payment is then debited and credited to the respected accounts. Electronic transfers are usually completed the same day. It has evolved over the last several years because it is faster, more secure, and a cheaper way of transferring money. Banks can choose to use the fed or a private clearinghouse for a small fee, of course.

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