The Federal Reserve Essay -- Economics

To understand the purpose and role of the Federal seize System, we must first know the introduction of the central bank of the United States. On December 23, 1913 President Woodrow Wilson signed The Federal Reserve Act. The primary purpose of the act was to make sure that a supply of money and creed would be available in the United States to meet banking demands by establishing Federal Reserve Banks which would hold the responsibility of supporting the credit structure during periods of financial strain. Other banks were expected to rely on the Federal Reserve for emergency cash and credit. Government and banking influence would select the management, primarily a board of directors chosen by banks. Supervision would be by the Federal Reserve progress. The intent in 1913 was to create eight to twelve centrally laid district Federal Reserve Banks and national banks would be required to keep a part of their reserve with the Federal Reserve. The Federal Reserve would receive deposits from the governing and receive deposits and lend to member banks only. It took almost a year to determine the boundaries of the decided twelve districts and establish the twelve Reserve Banks (one of the four components of the Federal Reserve). Named after the city in which they are located, the twelve Banks are Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Federal Reserve plays a significant role in maintaining the st index and liquidity (the ability to turn an asset into cash) of the financial system by working towards low and stable inflation and also strive to encourage growth in production and employment . A second component, the Federal Reserve Board... ...y 10). Retrieved May 23, 2012, from Board of Governors of the Federal Reserve System http//www.federalreserve.gov/newsevents/press/other/20110110a.htmPress Release. (2012, January 11). Retrieved May 23, 2012, from Boa rd of Governors of the Federal Reserve System http//www.federalreserve.gov/newsevents/press/other/20120110a.htm(1914). The Federal Reserve Act of 1913. In O. Sprague, The Quarterly Journal of Economics, Vol. 28 No. 2 (pp. 213-254). Oxford University Press.The budgetary Impact and Subsidy Costs of the Federal Reserves Actions During the Financial Crisis. (n.d.). Retrieved May 21, 2012, from CBO http//www.cbo.gov/publication/21491Who are the members of the Federal Reserve Board, and how are they selected? (n.d.). Retrieved May 21, 2012, from Board of Governors of the Federal Reserve System http//www.federalreserve.gov/faqs/about_12591.htm