The Federal Reserve System was founded by Congress in 1913 to be the central bank of the United States. The Federal Reserve System was founded to be a safer, moreflexible, and more stable monetary financial system. Over the years, the role of theFederal Reserve Board and its influence on banking and the economy has increased.Today, the Federal Reserve System’s duties fall into four general categories. Firstly, the FED conducts the nation’s monetary policy. The FED controls the monetarypolicy by influencing credit conditions in the economy. The FED measures its success inaccomplishing these goals by judging whether or not the economy is at full employmentand whether or not prices are stable. Not only does the FED control monetary policy byinfluencing credit conditions in the economy, it also supervises and regulates bankinginstitutions to ensure the safety and soundness of the nation’s banking and financialsystem. The FED protects the credit rights of consumers. Thirdly, the FED maintains thestability of the financial system by controlling the risk that may arise in financial markets. Fourthly, it is also the Federal Reserve System’s responsibility to provide certain financialservices to the U.S. government, to the public, to financial institutions, and to foreignofficial institutions, including playing a major role in operating the nation’s paymentssystem.Before Congress created the Federal Reserve System, periodic financial panics hadplagued the nation. These panics had contributed to many bank failures, businessbankruptcies, and general economic downturns. A particularly severe crisis in 1907prompted Congress to establish the National Monetary Commission, which put forthproposals to create an institution that would counter financial disruptions of these kinds. After a great deal of debate and discussion, Congress passed the Federal Reserve Act,which President Woodrow Wilson signed into law on...
