The Federal Reserve System (FRS), established in 1913, represents in a certain sense an unusual combination of state and independent banking structures.
Being a central banking system,it was created mainly as a response to a series of banking panics in the early 20th century, especially for a serious crisis in 1907. Over time, its roles and responsibilities expanded, the structure evolved. Some events, especially the Great Depression, were the factors that led to changes in it.
The Federal Reserve historically hasorigins in financial and credit institutions, organized since the end of the 18th century and performing the functions of a central bank. This is the constitutional gold standard, the First and Second US banks, the Independent Treasury, the National Banking System, the Association of Clearing Houses, the National Reserve Association. Banking in America was not at all easy or, rather, unreliable. The first and second banks were official representatives of the US Treasury, which issued and maintained the official currency. All other structures were managed by either state or independent parties. Each bank issued its own banknotes. Public and private institutions competed among themselves. People who traveled the country did not know exactly what money they could get from any bank that was in this or that area. With the growth of the population, the greater economic activity of banks, and the types of money, there was more that threatened chaos in the entire financial system.
В 1863 году Конгресс принял первый закон о national banks, providing for a controlled system of national banks that had higher standards for reserves and business practices than in state-owned banks. The law established operational standards, according to them it was determined how much capital could be available to banks, and how they should manage loans. In addition, the law imposed a 10 percent tax on state banknotes, thus effectively eliminating non-federal currency from circulation.
The Federal Reserve System, as formulatedin the law on the Fed, which came into force in December 1913, had other purposes, except as a response to bank panics. Among the main ones: providing stable currency and moderate long-term interest rates, establishing effective control over the banking business in the United States. The term "federal" implies that the law is applied throughout the country, "standby" emphasizes the role of the new institution as a reserve holder. The US Central Bank, which performs the functions of the Federal Reserve, in accordance with a law approved by President Woodrow Wilson, is the body authorized to issue Fed and Federal Reserve banknotes as legal tender. Any bank that uses the definition "national" must be a member of the Fed.
The structure of the FRS includes a board of governors with a headand his deputy, who is elected by the US president and approved by the Senate, the federal committee on open markets, 12 regional federal reserve banks, numerous private banks, various advisory councils. Accordingly, the US Federal Reserve System includes both private and publiccomponent. It was designed to serve the interests of public and private organizations. In the central bank system, it is considered a unique structure.
Board of Governors controls the activities of 12The Fed, several finance, credit and consumer advisory committees and thousands of banks (members of the Fed). It establishes minimum reserves limits for all banks, in other words, determines how much capital a bank can have on its hands. The Federal Reserve is considered an independent central banking institution, since its policies should not be approved by the president or any other executive or legislative authority. Although the government exercises some control over the Fed, namely by setting and setting wages for the highest level employees in the system.
