The Federal Reserve Act, passed by Congress in 1913, established the Federal Reserve System, a central banking system of the United States. The Federal Reserve System consists of the Board of Governors, the Federal Open Market Committee, 12 regional Federal Reserve Banks, and member banks. The Federal Reserve System has the responsibility to regulate the nation’s monetary system, control inflation, and foster economic growth.
Structure of the Federal Reserve Act
The Federal Reserve Act, enacted in 1913, established the Federal Reserve System, the central banking system of the United States. The act’s key provisions include:
1. Establishment of the Federal Reserve System
- Created a three-tiered system consisting of:
- A Board of Governors in Washington, D.C.
- 12 Federal Reserve Banks located in major cities across the country
- Member banks that hold stock in the Federal Reserve Banks
2. Goals of the Federal Reserve System
- Primarily: Maintain price stability by controlling inflation
- Other Goals:
- Promote maximum employment
- Moderate long-term interest rates
- Foster financial stability
3. Powers of the Federal Reserve
-
Monetary Policy Tools:
- Open Market Operations: Buying and selling government securities
- Discount Rate: Interest rate charged to banks that borrow from the Federal Reserve
- Reserve Requirements: Minimum amount of reserves that banks must hold
-
Regulatory Authority:
- Oversees banks and other financial institutions
- Regulates the issuance of new money
4. Organization of the Federal Reserve
- Board of Governors:
- Seven members appointed by the President
- Terms of 14 years
- Responsible for setting monetary policy and overseeing the system
- Federal Reserve Banks:
- Governed by boards of directors appointed by member banks
- Provide banking services to member banks and the federal government
- Federal Open Market Committee (FOMC):
- Sets monetary policy
- Consists of the Board of Governors and representatives from the Federal Reserve Banks
Structure of the Federal Reserve Act:
| Section | Content |
|---|---|
| 1 | Definitions |
| 2 | Organization of the Board of Governors |
| 3 | Establishment of Federal Reserve Districts |
| 4 | Membership in Federal Reserve System |
| 5 | Powers of Federal Reserve Banks |
| 6 | Federal Reserve Notes |
| 7 | Reserves |
| 8 | Open Market Operations |
| 9 | Discount Kate |
| 10 | Federal Advisory Council |
| 11 | Board of Governors Report |
| 12 | Amendment of the Federal Reserve Act |
Question 1:
What is the definition of the Federal Reserve Act?
Answer:
The Federal Reserve Act, also known as the Glass-Steagall Act, is a federal law passed by the United States Congress in 1913.
Question 2:
What purpose does the Federal Reserve Act serve?
Answer:
The Federal Reserve Act created the Federal Reserve System, a central banking system for the United States.
Question 3:
How did the Federal Reserve Act impact the financial system in the United States?
Answer:
The Federal Reserve Act established a system of regional Federal Reserve Banks and gave the Federal Reserve the authority to set monetary policy and regulate banks.
Well, there you have it, folks! I hope this little crash course on the Federal Reserve Act has been helpful. Remember, it’s a complex topic, but its creation marked a significant turning point in American financial history. If you still have questions or want to dive deeper, be sure to check out some of the resources I’ve linked throughout the article. And don’t forget to come back soon for more history n’ stuff! I’ll be waiting with open arms… and a fresh stack of historical tidbits to share. Cheers!