Under the new system the United States, as already indicated, is divided into twelve Federal Reserve Districts, each having a regional Federal Reserve Bank with a capital of at least $4,000,000 subscribed by the member banks of the district. National banks are obliged to become members, while with State banks and trust companies membership is optional. There are no depositors in the Reserve Bank of a given district except the member banks themselves and the United States Government. The Government under the Act no longer deposits its reserve funds in ordinary banks, as formerly, or lets them lie unused in the vaults of the sub-treasuries; but places them in the Federal Reserve Banks, subject to the supervision of the Federal Reserve Board at Washington, and to the direct authority over them of the Secretary of the Treasury.

The Act provided for an issue of $500,000,000 of new Treasury notes of the United States, to be apportioned among the several Federal Reserve Banks, and to be supplied by them in turn to the ordinary member banks at such times as money is especially needed for the transaction of business, as when crops are being moved and so on. This supply of currency is secured by the banks depositing commercial paper with the Federal Reserve Bank.