The federal reserve is the central bank of the united states and is arguably the most influential economic institution in the world one of the chief responsibilities set out in the fed's charter is the management of the total outstanding supply of us dollars and dollar substitutes.
The federal reserve system (also known as the federal reserve or simply the fed) is the central banking system of the united states of america it was created on december 23, 1913, with the enactment of the federal reserve act , after a series of financial panics (particularly the panic of 1907 ) led to the desire for central control of the monetary system in order to alleviate financial crises. The federal reserve system was established by congress nearly a century ago to serve as the us central bank president woodrow wilson signed the federal reserve act into law on december 23, 1913 prior to the creation of the fed, the us economy was plagued by frequent episodes of panic, bank failures, and credit scarcity.
1935 – creation of the federal open market committee the creation of the federal reserve helped to stabilize the nation’s money and banking system, but bank panics were not entirely eliminated during the great depression of the 1930s, bank failures were common again. The federal reserve act of 1913 establishes the federal reserve as the nation’s central bank and provides for a national banking system that is more responsive to the fluctuating financial needs of the country.
And in a concession to those leery of creating a central bank, the federal reserve system, like the first and second banks of the united states, was set to dissolve at a fixed date in the future.
The bank of the united states, now commonly referred to as the first bank of the united states, opened for business in philadelphia on december 12, 1791, with a twenty-year charter branches opened in boston, new york, charleston, and baltimore in 1792, followed by branches in norfolk (1800), savannah (1802), washington, dc (1802), and new orleans (1805. The federal reserve system is the central bank of the united states it performs five general functions to promote the effective operation of the us economy and, more generally, the public interest.
The federal reserve system formally committed to maintaining a low interest rate peg on government bonds in 1942 after the united states entered world war ii it did so at the request of the treasury to allow the federal government to engage in cheaper debt financing of the war.