The Federal Reserve ( Investopedia ) Essay

1574 WordsNov 19, 20167 Pages
In 1913, the United States Congress created the world’s most powerful monetary system, called the Federal Reserve (Investopedia). It involves one central agency and twelve regional Federal Reserve Banks that are accountable for their designated areas in the United States (Investopedia). Its primary purpose was to establish a secure, malleable, and a solid financial system which was to prevent financial devastation during times of crisis (Investopedia). More specifically, prior to the creation of the Federal Reserve Bank, the United States had bouts of crisis that created panic among the citizens. In utter terror, people would withdraw their funds from their banks causing a domino effect of financial institutions being pushed out of business due to a deficiency of money (stlouisfed). Therefore, the Federal Reserve Act was endorsed as a resolution to crisis periods, providing a money supply that would balance the economy, and introduce Federal Reserve Notes as a form of new currency (stlouisfed). In essence, the Federal Reserve became fully responsible for developing a comprehensive banking system that would allow for a strong economy. Therefore, one must understand the structure, the function, and the future of the Federal Reserve Bank that continues to financially secure this great country. First, one must understand the structure of the Federal Reserve Bank that continues to financially secure this great country. Today, the Federal Reserve System is comprised of

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