Understanding the Federal Reserve system through Ohio’s regional bank president

Austin Gano
Fri, 13 Feb 2026 02:55:27 +0000
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Beth Hammack, president and CEO of the Federal Reserve Bank of Cleveland, speaks at the WOSU Public Media headquarters on Wednesday. Credit: Daniel Bush | Campus Photo Editor

The Federal Reserve, to many, is a very complex system. On Wednesday, the leader of the Fed’s Cleveland branch traveled to Ohio State to share her insights on how it works.

President and CEO of the Federal Reserve Bank of Cleveland Beth Hammack spoke with the Ohio State community on leadership and her role in shaping the nation’s monetary policy on Wednesday at WOSU on 1800 N. Pearl St.

“The Fed is not just a mystery to you,” Hammack said. “I worked on Wall Street for 30 years and I have friends who don’t really know the full extent of what we do.”

The Fed was established by Congress through the Federal Reserve Act of 1913, and is divided into three parts: the Board of Governors, the 12 regional banks and the Federal Open Market Committee, Hammack said.

The Fed is a central bank that has multiple locations, serving five main functions to promote employment and stable prices, Hammack said.

The Board of Governors has seven members, all appointed by the U.S. president and confirmed by the Senate, serving for 14 years. It is led by the chair, currently Jerome H. Powell, who serves a four-year term, according to the Fed.

The U.S. was divided into 12 districts, each represented by its own Fed bank. The Federal Reserve Bank of Cleveland covers the fourth district, encompassing Ohio and parts of Kentucky, West Virginia and Pennsylvania.

According to Hammack, part of her role as a regional president requires working with the community and economic powerhouses in the region. In Columbus, she met with the Ohio Bankers League on Tuesday to discuss the current state and predictions of the economy.?

Hammack said Ohio’s district is somewhat unique in that it has so many industries including strong manufacturing, education, medicine, agriculture and the growing technology field.

Members of the Board of Governors and the 12 regional presidents meet in Washington, D.C. eight times a year as the Federal Open Market Committee, or FOMC. All members attend the meetings, but only the seven governors, the president of the New York Fed bank and four other regional presidents, on an annual rotation, vote on monetary policy, Hammack said.

The FOMC votes on guidance to either raise, lower or keep interest rates the same, one of the five functions of the Fed. Factors such as the unemployment rate, new jobs created and inflation play into these decisions, according to Hammack.

The labor market is stabilizing, and Hammack said maintaining the rates is essential to lowering inflation.

“I think we’re supposed to stay on hold right here,” Hammack said. “I don’t want to be fine-tuning the economy.”

Another function of the Fed is to maintain financial stability, Hammack said. One way it did this was by lowering the federal funds rate target range to just above zero to support the labor market during the COVID-19 pandemic. As the economy recovered, the Fed raised the federal funds rate to fight inflation.

The Fed is also responsible for supervising and regulating banks to make sure they are following the law.

“A strong banking system is really the foundation of a strong economy,” Hammack said.

The fourth function the Fed serves is protecting consumers and developing communities.

Through the Community Reinvestment Act, the Fed encourages community investment from local banks, without advocating for policy, according to Hammack.

Lastly, the Fed is responsible for running the nation’s payment system, Hammack said. It facilitates wire transfers, electronic payments and processing checks. It also processes cash to ensure bills are fit for circulation. Unfit bills are shredded and counterfeit bills are given to the U.S. Secret Service.

“We have 28 facilities around the country,” Hammack said. “It’s kind of like an Amazon warehouse of cash dollar bills.”

Common misconceptions about the Fed are differences between fiscal and monetary policy, according to the moderator of the event, Stephanie Moulton, professor and associate dean for faculty and research at the John Glenn College of Public Affairs.

The defense budget and housing, which are spending and taxes, are fiscal aspects of the economy controlled by legislatures, Moulton said. Interest rates are monetary aspects and that policy is controlled by the Fed.

The independence of the Fed is also critical to the economy’s success, according to Moulton.

“If every president got to control the Fed, they’d always want interest rates to be low, and our economy would slowly crumble,” Moulton said.

The article was edited on Feb. 13 at 10:28 a.m. to correct what the Fed did during the COVID-19 pandemic.