The Federal Reserve System: The Central Bank of the United States

Introduction

The Federal Reserve System (FRS) is the central bank and monetary authority of the United States. It is responsible for regulating the nation's financial system and controlling the supply of money and credit.

History of the Federal Reserve System

The FRS was established in 1913 by the Federal Reserve Act. Prior to this, the United States did not have a central bank, and the monetary system was largely unregulated.

Structure of the Federal Reserve System

The FRS is made up of 12 regional Federal Reserve banks, each of which is responsible for a specific geographic area of the United States. The banks are supervised by a seven-member Board of Governors in Washington, D.C.

Functions of the Federal Reserve System

The FRS has a wide range of responsibilities, including:

• Setting interest rates
• Regulating the banking system
• Controlling the supply of money
• Providing financial services to banks and other financial institutions