Question

Discuss the history of the Federal Reserve and its current structure

Answer 1

The Federal Reserve is the central bank of USA. Its foundation was laid in the year 2013 by the congress with an aim to provide a safer, flexible and stable monetary as well as financial system in an effective way. Over the years, the role of Federal Reserve has increased tremendously. It was established after a series of panic in the financial system including the panic of 1907, which led to the need of a central control for managing monetary and financial aspects of the nation.

The Federal Reserve is governed with many layers. The board of directors of federal reserve is appointed by the president and they are 12 in numbers. They collectively manages all the commercial banks in the nation. There are federal reserve banks (12) within the country with its 24 branches. The commercial banks are members of Federal Reserve. Currently 38% of 8,039 commercial banks are member of Federal Reserve. The Federal Reserve also regulates around 17,000 depository institutions operating in the country. The Federal Reserve also has its Federal Open Market Committee, which is a monetary policy making body of the central bank. Besides that, the central bank also has three advisory councils. These councils have its meetings two to four times within a year.