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.
The Federal Reserve, commonly referred to as the FED, is the United States centralized banking system. There are 12 regional central banks. The Federal Reserve was established in 1913 with the passage of the Federal Reserve Act. It has a seven member Board of Governors appointed by the President of the United States.