Summary: The mission, the structure, and especially the finances of the Federal Reserve System, the nation's central bank, make it unique among government entities. Unlike federal agencies funded through congressional appropriations, the Fed is self-funded, deducting its expenses from its revenue and transferring the remainder to the U.S. Treasury. Although the Fed's primary mission is to support a stable economy, not to maximize the amount transferred to the Treasury, deductions from Fed revenues do represent a cost to taxpayers. Because of continuing federal budget constraints, Members of Congress requested GAO to analyze the Fed's finances. This report (1) examines trends in the cost of Fed operations from 1988 to 1994 and its controls over spending and operations, (2) identifies ways to increase the Fed's efficiency without harming its effectiveness, (3) discusses developments that could significantly affect the Fed's mission and finances, and (4) assesses the Fed's strategic management processes and identifies steps that it could take to meet future challenges and ensure the efficiency and the effectiveness of its operations.
