Federal Reserve

The Federal Reserve is the central bank of the United

States. It was created by Congress to provide the nation

with a safer, more flexible and more stable monetary and

financial system. The Federal Reserve was created on

December 23, 1913, with the signing of the Federal Reserve

Act by President Woodrow Wilson. Today, the Federal

Reserve’s duties fall into four general areas:conducting the

nation’s monetary policy by influencing money and credit

conditions in the economy in pursuit of full employment and

stable prices, regulating banking institutions to ensure the

safety of the nation’s banking and financial system and to

protect the credit rights of consumers, maintaining the

stability of the financial system and providing certain

financial services to the U.S. government, to the public, to

financial institutions and to foreign official institutions.

The structure of the Federal Reserve was designed

by Congress to give it a broad perspective on the economy

and on economic activity in all parts of the nation. It is

composed of a central government agency(Board of Governors)

in Washington D.C., 12 regional Reserve Banks, located in

major cities around the nation.

The Federal Reserve’s income comes from the

interest on U.S. government securities that it has acquired

through open market operations. Other sources of income are

the interest on foreign currency investments. Once the

Federal Reserve has paid its expenses, it then turns over

the rest of its earnings to the U.S.