The Federal Reserve System

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After the Revolutionary War, many of the country’s citizens were in great debit and there was widespread economic disruption. The country was in need of an economic overhaul and the new country’s leaders would need to decide how to do this to ensure the new country did not fall apart. After two unsuccessful attempts at a national banking system, the Federal Reserve System was created by the Federal Reserve Act of 1913. Since its inception, the Federal Reserve System has evolved into a central banking system that grows with the country. The Federal Reserve System provides this country with a central bank that is able to pursue consistent monetary policies. My goal in this paper is to help the reader to understand why the Federal Reserve System was created, how it has evolved since it was created, and how it functions today.

To achieve this goal, I have organized my paper into three main sections, which have sub-sections. In the first section, I discuss why the Federal Reserve System was needed and the banks that preceded it. In the second section, I discuss the creation of the Federal Reserve System, key Acts that have affected it, and the evolution of its structure. I end my paper with a third section that explores the responsibility of the Federal Reserve System to be the monetary policy authority for the United States.

NEED FOR A NATIONAL BANK

After the War for Independence, the United States was in great need for financial structure. The war had caused economic disruption throughout the new country and the new country needed re-establish commerce, repay war debt, restore the value of the currency, and lower inflation. Alexander Hamilton, the first Secretary of the Treasury, decided to research the economic struc...

... middle of paper ...

...as over 75 years later before it made its last attempt, which is the system we have in place today. The Federal Reserve System has made many changes since it was first implemented but it remains the monetary policy authority it was created to be.

Works Cited

"The Structure of the Federal Reserve System." The Federal Reserve System Online. U.S. Federal Government, 08 Jul 2003. Web. 17 Sep 2011. .

Todd, Tim. The Balance of Power. First. Kansas City: Federal Reserve Bank, 2009. 1-2. Print.

United States. First Bank of the United States. Philadelphia: Federal Reserve Bank of Philadelphia, 2009. Web.

United States. History of Central Banking. Philadelphia: Federal Reserve Bank of Philadelphia, 2010. Web.

United States. Second Bank of the United States. Philadelphia: Federal Reserve Bank of Philadelphia, 2010. Web.

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