Federal Reserve

The central banking system of the US is known as the Federal Reserve. Its headquarters are in Washington DC and is the most powerful institution in the world. All the major decisions about the finance are taken in Federal Reserve also known as Fed Bank or Fed Reserve.

History of Federal Reserve

It was founded on 13th December 1913 under the act of Federal Reserve Act. It was founded because the world had undergone a depression of 1907. Thus to help the common masses the US government laid the foundation of the Federal Reserve.

Objective of the Federal Reserve

It was founded basically with three major objectives. There are as follows

  1. Generate employment
  2. Stabilize Prices
  3. Affordable interest rates

These were the major objectives of the Federal Reserve for which it was founded.

Members of the Federal Reserve

Many nationalized banks are the members of the Federal Reserve and they take the major decisions in the financial planning of the economy.

Purpose of Federal Reserve

The bank was established with some goals and objectives. Out of many, some are listed below. They are:

  1. To solve problems of the banks at that point of time
  2. To create a central bank
  3. Generate employment
  4. Stabilize prices and reduce inflation
  5. Maintaining the stability of the financial institutions
  6. To protect the rights of the consumers by implementing proper interest rates
  7. Make the US as the most powerful nation in the world

These were some of the major purposes of the development of the Federal Reserve.

Stable Government

During that period of time, the government was not stable. People had lost faith and there were cold wars between the government and the financial institutions. The creation of Federal Reserve made a central ruling authority and stabilized the government and the banks. It created a balance between the two of them which helped in the progress of the nation.

Growth of Federal Reserve

As and when the Federal Reserve started developing it changed its shape and was named as Fed Bank which became the central ruling bank of the US. Later many acts were formed like the Federal Open Market Committee and the Federal rates were implemented to help the common masses as well as the banks.

Eventually when many nationalized banks became the member of the Fed Bank then the power doubled. It laid the foundation of a strong financial institution and a great future.

This is the history of the development and the growth of the Fed Bank. It not only helped in stabilizing the nation but also helped in uplifting many banks that underwent a number of financial crisis.

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