History and structure of
Federal Reserve System
1. Background and Establishment of FED
The Federal Reserve System (informally known as FED) was established in 1913 according to the Federal Reserve Act passed by Congress. From its establishment until now, the FED acted as the central bank role of America. The FED’s mainly duties include conducting the nation's monetary policy, supervising and regulating banking institutions, maintaining the stability of the financial system and providing financial services to various relative institutions.
Before the establishment of Federal Reserve, there were two failed attempts to set up a U.S. central bank in American history. The System's earliest precursor, the First Bank of the United States, was established by Congress in 1791 on a 20-year charter. The Second Bank of the United States was chartered in 1816. Both of them were predominantly private ownership and their governance was geographically centralized. Some complaint them on being dominated by narrowly defined private interests.
Following a severe bank panic in 1907, Congress created the National Monetary Commission to study the nation's money and banking system and to recommend changes. Then in December 1913, Congress passed the Federal Reserve Act, which President Woodrow Wilson signed into law. The act established the Federal Reserve Banks, whose purpose would be to furnish an elastic currency for the country and to establish more effective banking supervision. The System was specifically designed to be insulated from short-term political pressures, to be a partnership of public and private control, and to represent regional economies.
2. Structure and Roles of FED
The Federal Reserve System's structure is composed of the Board of Governors, the Federal Open Market Committee, twelve regional Federal Reserve Banks, numerous privately owned U.S. member banks and various advisory councils.
1) Board of Governors
Brief Introduction: The Federal Board...