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The Federal Reserve Bank - Essay Example
Author : rudy19
Finance & Accounting
Pages 5 (1255 words)
The Federal Reserve Bank History of the Federal Reserve Bank Federal Reserve Bank is the central banking system of USA. There are 12 parts of Federal Reserve Bank which together form an important part of the system of Federal Reserve in USA. Those 12 banks divide the nation into 12 districts of Federal Reserve according to the Federal Reserve act (1913)…
It was established in the year 1791 with its charter signed by George Washington. The bank used to perform all the major banking functions. After the expiry of the charter 20 years hence, country was without a central bank for few years resulting into inflation. Again a second bank came into existence in 1816 with a charter signed by James Madison. In 1833 again the charter expired and United States went without a central bank for 40 years. In 1873, gold was standardized into bimetallic standard. Then a private set up by the name of JPMorgan came into existence who was the lender of the last resort for the banks who are facing crisis. Federal Reserve Act of December 23, 1913 created the Federal Reserve System. A new central bank was established which would act as the lender of the last resort to banks facing crisis, assured the investors not to disinvest their money. Federal Reserve Bank was opened in 1914. Federal Reserve notes were provided by the Congress so that the currency supply in the economy remains flexible. The Federal Reserve System is the independent agency, that exists outside the Cabinet of the executive and its powers are derived from congress. ...