History of the Federal Reserve

History of the Federal Reserve

Federal Reserve is the central bank of the United States that was formed to deal with all the financial matters regarding the United States. It was established after the United States faced several challenges in managing the United States economy. The economy experienced several booms and busts that brought panic to the united states; the country required a central body that could come up with measures to make the economy stable and grow by managing and dealing with financial matters. Some banks were operating in the United States but lacked a regulator to check their operations, and the legislators show the need to form a body that would regulate the operations of the banks.

At the formation of the Federal Reserve, the Congress wanted the Federal Reserve to meet three main objectives which include the monitory policy that involves moderating the interests’ rates and stabilizing the exchange rates (Williamson 925). Also, the Federal Reserve was to act as a depository to act on behalf of the government. The state faced challenges in lacking an institution that would protect the interests of the state in dealing with financial matters. After the formation of the Federal Reserve, the country solved many challenges that it faced in dealing with financial matters.

Structure of the Federal Reserve

The federal government is run the board of governors that are seven in number; the governors are responsible for running all the operations of the reserve (Williamson 928). The president appoints the governors after their term end; however, the president appointees need to be vetted by the Senate after appointed to check their suitability of running the reserve. The board is responsible for overrunning all the operations of the reserve and implementing all the policies that the bank implement in the interest of the state.

The running of the operations of the Federal Reserve is structured in different levels that include the board of governors, the open federal committee, the member banks, and the middle size groups. Each level has its mandate that they deal with independently but with consultations with other stakeholders (Williamson 929). The federal committee ranks after the board of management and works in hand with the board in running the Federal Reserve. The reserve is responsible for developing policies that the reserve uses in running and making decisions that foster economic development of the United States. The policies keep on being reviewed by the federal committee to ensure that they are up to date with the challenges faced by the Federal Reserve.

The other structure of the Federal Reserve after the federal committee includes the federal banks; they are the federal banks that are located in different parts around the country. The banks have their board of management that run the banks (Williamson 932). The reserve banks comprise of both private and public banks that offer banking services to the people. The reserve banks monitor the economy because they interact directly with the people and they understand the needs of the people. The private banks and other government banks are responsible and subject to the reserve bank of the United States. The board of governors are responsible to the president and the Congress, they protect the interests of the government. The reserve was formed at a time when the United States faced challenges in dealing with financial matters such as money laundering.

Work cited

Williamson, Stephen D. “Current Federal Reserve policy under the lens of economic history: a review essay.” Journal of Economic Literature 54.3 (2016): 922-934.