Sixteen students in Pomona College Professor Mico Loretan’s economics class “Monetary Policy and Central Banking” got a behind-the-scenes look at the Federal Reserve Bank of San Francisco (“the San Francisco Fed”) during a one-day field trip in November.
Pierangelo De Pace, an economics professor at Pomona who currently serves as an associate dean of the College, also joined the group for the whirlwind trip.
The San Francisco Fed serves the 12th and largest district in the Federal Reserve system. It supervises banking activity in nine Western U.S. states—Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah and Washington—as well as in American Samoa, Guam and the Commonwealth of the Northern Mariana Islands.
Visiting the Fed’s cash operations
The visit started with a guided tour of the Fed’s cash operations, located in a highly secure area in the lower basement of the Fed’s headquarters building at 101 Market Street. Financial institutions in the 12th District send bank notes to the Fed by armored vehicle and order fresh currency when ATMs and teller windows run low. The Fed uses high-speed optical scanning machines to check all incoming banknotes for authenticity and to automatically destroy and replace worn-out bills.
Dashawn Williams ’29, a psychological science major from Georgia, says he found the amount of money shredded daily due to damage “mind-blowing—about $18 million.”
Then the group met with macroeconomist Hamza Abdelrahman, a member of the group that briefs Mary Daly, San Francisco Fed President, before the regularly scheduled meetings of the Federal Open Market Committee (FOMC), the Fed’s main policy-setting body. The question-and-answer session explored the roles and functions of the San Francisco Fed—safeguarding the payments system, supervising banks to ensure they are operating properly, and conducting economic research to help inform the conduct of monetary policy.
Learning from people working behind the scenes
“After a semester learning about the Fed’s dual mandate”—low inflation and steady economic growth—“it was fascinating to hear directly from the people who work behind the scenes” to implement these mandates, says economics major Yeylin Mendoza Esquivel ’27. The tour “allowed me to apply my classroom knowledge to understand how the economy actually works.”
Ryan Hwang ’27, also an economics major, adds: “Seeing and hearing from the Fed researchers on their work and its role in the national monetary policymaking process helps me connect the concepts we’ve been studying to real-world decision-making.” The experience helped him solidify his choice of major as he aims for a career in government affairs or law.
Mendoza is still deciding on a career direction but found that the Fed tour “made me eager to keep learning about monetary policy and the central bank’s role in the economy,” adding that “maybe in a few years I will no longer be the student learning about econ concepts but instead I’ll be contributing to the field.”
This is Loretan’s first year teaching at Pomona, where he is a visiting professor of economics. He brings deep first-hand knowledge of central banking to his classes, having spent 13 years with the Federal Reserve Board in Washington, D.C., including several as a section chief in the Board’s International Finance division, and 12 years at the Swiss National Bank in Zurich.