The Federal Reserve System is a system that controls the financial flow of the United States. It is the central bank of the United States and a third central system of banking in the history of The US. The US nation has however divided into twelve Federal Reserve districts with banks in each district. The Member commercial banks own the Federal Reserve since they are the majority of shareholders (Bernanke and Ben 6). Even though they are the majority shareholders, they do not have the powers to control the Federal Reserve because they do not vote. The Federal Opening Market Committee, in this case, is responsible for making the Federal Reserve decisions. US Treasury Department, the President or even the Congress do not ratify the decisions made by the Federal Reserve. Congress is responsible for the approval of selected members by the president. The chairperson of the Federal Reserve heads the Federal Reserve System and is appointed directly by the president (Bernanke and Ben 8). Jerome Powell is the current chairman of the Federal Reserve System. President Donald Trump nominated him in February 2018. It has its headquarters in Eccles Building, Washington DC. The reason for opening up these twelve banks was to assist the Federal Reserve to carry out its daily activities with ease.
On December 23, 1913, Congress decided to come up with an idea of creating the Federal Reserve after The Federal Reserve Act was signed into law by President Woodrow Wilson. After a series of financial panics and stresses with the 1907 financial panic being the most particular, there was a desire for central monetary system control (Hatzel, Robert and Gary 277). The reason for the desire to have a central system of monetary authority was to alleviate crises in the financial system.
The Federal Reserve System often referred to as ‘The Fed' being the America's central bank is a compelling and influential body not only to the American economy but also to the world's economy. Many would consider it a ‘secret society' that controls the money of the world because of its complexity. They are however right because the central banks are responsible for monetary supply management globally though it is not a secret. The knowledge of how the Fed works entirely depends on the understanding of its structure (Hatzel, Robert
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