Organization attributes
Other attributes
The Federal Reserve System was created on December 23, 1913. Prior to this, there were central banks in the United States that were not particularly successful in controlling financial institutions. In 1907, there was a banking panic that led to the idea of creating a new central bank. After the crisis of 1907, legislators adopted an act that created the National Monetary Commission to work out possible options for reforming the monetary and banking sector. The result of the commission was the creation of the FED.
According to the law, the FED includes 12 federal reserve banks located in major cities, as well as about 3,000 commercial banks that are its members. The Federal Reserve System is an independent body in the US government - its decisions do not need the approval of the President, Congress or representatives of the judiciary. However, the US Congress often reviews the work of the FED and has the right to introduce a bill to change the rules of the FED.
FED performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest. The Federal Reserve:
- conducts the nation's monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy;
- promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad;
- promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole;
- fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and
- promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations.
