Author Box
Articles Categories
All Categories
Articles Resources

The Federal Reserve System - A Brief Overview

April 16, 2012 | Comments: 0 | Views: 82

Founded in 1913, the Federal Reserve System (FED) is the central bank of the United States. Originally established by Congress to stabilize the monetary system, the role of the Federal Reserve in both banking and the nation's economy has since expanded. As the most influential economic body in the country, FED regulations have widespread economic implications and a global impact.

Financial panics plagued the nation in the late 1800's and early twentieth century, which threw the economy into flux. Without capable means by which to support troubled depositary institutions, the nation's banking system was unable to counteract the economic effects of these financial panics. As such, Congress established the National Monetary commission, whose charge was to create an institution that would be equipped to counteract these types of financial catastrophes. The resolution of the NMC was the passing of the Federal Reserve Act "to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes." Woodrow Wilson signed this act into law on December 23, 1913.

Since its inception, the role in the FED has grown tremendously and its original mission statement and breadth have expanded through legislation. Today, the duties of the FED can be encapsulated into four major areas:

-influencing monetary and credit conditions to maximize employment, stable prices, and moderate long-term interest rates -supervising and regulating banking institutions to ensure the safety of the financial system and the credit rights of consumers -maintaining the stability of the financial system and containing risk in the financial markets -providing financial services to depository institutions, the US government and foreign entities.

The structure of the System gives it a wide perspective on US economic activity. At its center is the Board of Governors, located in Washington, DC, around which are twelve regional Federal Reserve Banks. Together, the Board of Governors and Reserve Banks oversee and regulate financial institutions and activity within their scope. Another major sector of the FED system is the Federal Open Market Committee, which is composed of Board of Governors, the president of the Federal Reserve Bank of New York, and presidents of four of the other regional Banks, the positions for which rotate. This Committee oversees open market operations and provides invaluable information to the FED regarding monetary and credit conditions.

Serving as an integral piece of the US economy and federal structure, the System has grown into a complex and far-rooted system. Either directly or indirectly affecting US interest and credit rates, the FED is the most important economic entity in the entire world.

The author has spent a lot of time learning about Federal Reserve System and other related topics. Read more about Federal Reserve at the author's website.

Source: EzineArticles
Was this Helpful ?

Rate this Article

Article Tags:

Federal Reserve System


Federal Reserve

Teenage rebellion is easier to tolerate in book or film form. Take a look back at some of the most well known and loved "coming of age" stories set in boarding schools.

By: Harvey McEwan l Arts & Entertainment l July 10, 2012 lViews: 445

An important thing you have to consider before working out is having a pair of great training shoes. You cannot immediately undergo any physical training wearing inappropriate footwear. If you do so,

By: Steve Hill l Recreation & Sports l July 10, 2012 lViews: 349

Granite is one natural stone that is used for several purposes from dimension stone to countertops to sculptures. The use of granite for building the temples and monuments was initiated millions

By: Steve L Patterson l Arts & Entertainment l July 10, 2012 lViews: 298

Up to 65,000 H-1B visas for new employment may be issued each fiscal year (FY) for professional workers, including medical providers. In general, a person who already has an H-1B and applies for

By: Ann Badmus l Arts & Entertainment l July 10, 2012 lViews: 309

Beside coin shooting, gold detecting or the many other things you can do with your metal detector. There is a large group of people who take their metal detector out looking for old stuff. Not just

By: Candy L Lindsey l Recreation & Sports l July 07, 2012 lViews: 293

Many people want to be writers and you may be one of them. In order to make your dream occupation a reality, you need to have a plan. You also need to work on this plan constantly. These tips from a

By: Harriet Hodgson l Writing & Speaking l July 06, 2012 lViews: 440

Instant prescreen was developed as a response to growing ineffectiveness of traditional batch prescreen. Traditional batch prescreen presents generic offers to a wide array of customers that, at the

By: Kelty Wallacel Finance l June 06, 2012 lViews: 151

Due to the condition of the economy, many people are opting for investments that are safer than the stock market. Here is some more information on these investment types.

By: Jennifer Noblesl Finance l June 05, 2012 lViews: 150

My search to find out what really happened in the U.S. in 2008. What really caused the global recession, mass foreclosures and millions in lost jobs?

By: Kevin Alvarezl Finance l June 03, 2012 lViews: 127

Reward credit cards allow you to bring in points while you spend, with benefits such as gifts, free flights, cash back and other rewards - just by using your credit card! The goal with any rewards

By: Ray E Ethelll Finance l June 02, 2012 lViews: 155

It is the duty and responsibility of any banker to ascertain the eligibility of a customer during the course of taking a decision to grant him a loan. Of course, the loan may be for a small amount or

By: Gauri Sankarl Finance l June 01, 2012 lViews: 180

Everyone is subconsciously wanting to catch with time that is why they may be more inclined using the quickest as well as easiest ways of performing things. Nevertheless you are wondering if you have

By: Stephanie R Obryanl Finance l June 01, 2012 lViews: 143

Discuss this Article

comments powered by Disqus