Debunking 4 myths about the Federal Reserve (2024)

Fact or fiction? The Federal Reserve plays many roles as the nation’s central bank, yet misconceptions can make their way into the public discourse. Read on for some Fed myth-busting.

Myth: The Fed prints money

While the Federal Reserve does not print money, the U.S. Department of the Treasury (Off-site) prints notes at the instruction of the Board of Governors of the Federal Reserve System and the 12 Federal Reserve Banks. Each year, the Fed places a print order with the Bureau of Engraving and Printing (Off-site) based on expected demand and the anticipated amount of currency that will be taken out of circulation. There are a few reasons why Federal Reserve Banks may destroy bills, such as if they are unfit to circulate or if a new design is being issued. Watch the U.S. Currency Education Program’s video “How does U.S. currency get into circulation?” (Off-site) to learn more.

Myth: The Fed owns gold

The Federal Reserve does not own any gold; however, the Federal Reserve Bank of New York acts as the custodian of gold owned by account holders such as the U.S. government, foreign governments, other central banks and official international organizations. No individuals or private-sector entities are permitted to store gold in the vault of the Federal Reserve Bank of New York or at any Federal Reserve Bank.

Myth: Private sector banks own the Fed

Some observers mistakenly consider the Federal Reserve to be a private entity because the Federal Reserve Banks are organized similarly to private corporations. In truth, the Fed is not "owned" by anyone. The Fed consists of both a federal agency — the Board of Governors based in Washington, DC — and 12 privately chartered regional banks nationwide. The Board of Governors have direct oversight of the regional Reserve Banks and coordinate with the Presidents of the Reserve Banks on monetary policy.

Myth: The Fed is not audited

The Federal Reserve is an audited organization subject to substantial oversight. All 12 Federal Reserve Banks are held accountable by internal auditors, outside audit firms, the Fed’s Inspector General, the U.S. Government Accountability Office and more. Read "Does the Federal Reserve ever get audited?” (Off-site) to learn more.