The Federal Reserve System, which is also called the Federal Reserve or The Fed, refers to the central banking system for the United States of America. The US government authorizes only the Federal Reserve to print and bring into circulation the nation’s paper money.
The Federal Reserve System was organized by a number of influential international bankers in the year 1910, and was officially ratified in 1913 when the Federal Reserve Act was passed. This act was completed and passed as a response to earlier financial worries, repeated runs on banks and the very serious Panic of 1907.
Since that time, the role of the Federal Reserve System has been significantly expanded due to such seminal events such as the Great Depression. The responsibilities of the Federal Reserve in modern times are generally distributed among four general domains.
First, it is responsible for managing the nation’s monetary policy. This includes influence over credit and money conditions within the economy, and the effort to maintain high levels of employment, keep prices stable, and support reasonable long-term interest rates.
Secondly, The Fed supervises financial and banking institutions to maintain safety and protect the financial and credit rights of consumers.
Thirdly, the Federal Reserve System keeps watch over the nation’s financial system, and controls the inherent risks that can come about in specific financial markets.
Finally, it offers financial services to the government, foreign institutions, and other organizations, including playing a significant role in managing the nation’s system of payments.
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