The Federal Reserve Bank of New York has supervisory jurisdiction over the Second Federal Reserve District, which encompasses:

• New York State
• 12 northern counties of New Jersey
• Fairfield County in Connecticut
• Puerto Rico
• the Virgin Islands

Though it serves a geographically small area compared with those of other Federal Reserve Banks, the New York Fed is the largest Reserve Bank in terms of assets and volume of activity.

The New York Fed has three unique missions. Foremost is the implementation of monetary policy. The other two missions involve international operations, and supervision and regulation.

In addition to the responsibilities the New York Fed shares in common with the other Reserve Banks, it has several unique responsibilities, including conducting open market operations, intervening in foreign exchange markets, and storing monetary gold for foreign central banks, governments and international agencies.

Through open market operations, the New York Fed buys or sells U.S. Treasury securities in the secondary market in order to produce a desired level of bank reserves. These securities are held in the System's portfolio. The "primary dealers," authorized to do business with the New York Fed, serve as its counter parties in open market operations and other securities transactions.

Only the Federal Reserve Bank of New York conducts the open market operations for the System under the direction of the twelve-member FOMC. The president of the New York Fed is a permanent voting member of the FOMC and uniquely, the Bank’s first vice president may vote at the meetings in the president's absence.

The New York Fed, representing the Federal Reserve System and the U.S. Treasury, is responsible for intervening in FX markets to achieve dollar exchange rate policy objectives and to counter disorderly conditions in these markets. Such transactions are made in close coordination with the U.S. Treasury and Board of Governors, and most often are coordinated with the foreign exchange operations of other central banks.

FX intervention has become much less frequent since the late 1990s. The New York Fed intervened in the FX market on eight different days in 1995, but only twice from mid-August 1995 through June 2007.

The New York Fed serves as fiscal agent in the United States for foreign central banks and official international financial organizations. It acts as the primary contact with other foreign central banks. Among the services provided for these institutions are:

• Receipt and payment of funds in U.S. dollars
• Purchase and sale of foreign exchange and US Treasury, US agency and other US dollar denominated securities
• Custody of almost $2.5 trillion in currency, securities and gold bullion held for over 250 foreign account holders
• Storage of monetary gold for foreign central banks, governments and official international agencies

October 2007