Treasury and Federal Reserve Differences and Similarities

The functions of the Federal Reserve System and the Department of the Treasury may be different. However, both bureaus are important and their roles are interrelated. What is more, they have a big impact on the United States’ economic policy.

Let us learn more about each organisation through the following details.

Treasury Department
The nation’s official treasury makes coins and prints money through the Mint. It also manages revenue collections by auctioning reserve bonds and acquiring tax receipts. Additionally, it issues savings bonds and ensures punctual interest and principal payments from bondholders. What is more, it has a law enforcement group, the U.S. Marshalls, mainly responsible for putting laws into effect and prohibiting currency counterfeiting.

Federal Reserve
Under the Chairman of the Federal Reserve, the bureau directs, supervises, and regulates member banks. It also establishes temporary interest rates by laying down the discount rate at which distressed (near bankruptcy) banking firms can lend straight from the organisation. Moreover, it sets a target fund rate, which member financial institutions ask as payment from each other in case of overnight lends to comply with short-term obligations. Finally, it implements strict conditions on deposit and balance amounts for a bank to borrow money.

As you can see, both departments have their own set of responsibilities. Looking closely, you will notice that the main similarity is national funding. For more insight, you can check out the other pages on this blog.