the creation of the federal reserve system was an attempt to prevent financial panics.
the creation of the federal reserve system was an attempt to prevent financial panics.
the creation of the federal reserve system was an attempt to?
financial panics
the federal reserve system (also known as the federal reserve or simply the fed) is the central banking system of the united states of america. it was created on december 23, 1913, with the enactment of the federal reserve act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. over the years, events such as the great depression in the 1930s and the great recession during the 2000s have led to the expansion of the roles and responsibilities of the federal reserve system.
federal reserve
the twelve federal reserve banks provide the financial means to operate the federal reserve system. each reserve bank is organized much like a private corporation so that it can provide the necessary revenue to cover operational expenses and implement the demands of the board. a member bank is a privately owned bank that must buy an amount equal to 3% of its combined capital and surplus of stock in the reserve bank within its region of the federal reserve system. this stock "may not be sold, traded, or pledged as security for a loan" and all member banks receive a 6% annual dividend. no stock in any federal reserve bank has ever been sold to the public, to foreigners, or to any non-bank u.s. firm. these member banks must maintain fractional reserves either as vault currency or on account at its reserve bank. as of october 2008, the federal reserve has paid interest to banks' holdings in reserve banks' accounts. the dividends paid by the federal reserve banks to member banks are considered partial compensation for the lack of interest paid on the required reserves. all profit after expenses is returned to the u.s. treasury or contributed to the surplus capital of the federal reserve banks. since shares in ownership of the federal reserve banks are redeemable only at par, the nominal "owners" do not benefit from this surplus capital. in 2010, the federal reserve system contributed $79 billion to the u.s. treasury.
structure of the federal reserve system