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.
Federal Reserve Act of 1913
The Federal Reserve Act of 1913 established a centralized bank in the United States. This is commonly referred to as the Federal Reserve or the Fed. It is tasked with maximizing employment, stabilizing prices and setting the interest rates used in banking and loans.