Centralized Bank

A form of banking whereby a single body or governing board manages the finances of a country. Central banks are granted their powers by the country’s government and they manage the economy based on their policies. In addition, they control the interest rates, employment rates and the inflationary rate.

The Federal Reserve System

Federal Reserve

No other federal government creation is more misunderstood than the Federal Reserve System.  The Federal Reserve’s primary purpose is to act as the central banking system for the United States.  Formed in 1913, the Federal Reserve was tasked by Congress with three primary functions.  One – maximize employment in the United States.  Two – stabilize prices (control the inflation rate) and three – influence the interest rates for long-term notes.  Since 1913 the Federal Reserve has expanded its role to include setting the monetary policy and regulating the entire US banking system.

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