Purpose
The primary motivation for creating the Federal Reserve System was to address banking panics. Other purposes are stated in the Federal Reserve Act, such as "to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes". Before the founding of the Federal Reserve System, the United States underwent several financial crises. A particularly severe crisis in 1907 led Congress to enact the Federal Reserve Act in 1913. Today the Federal Reserve System has responsibilities in addition to ensuring the stability of the financial system.
Current functions of the Federal Reserve System include:
- To address the problem of banking panics
- To serve as the central bank for the United States
- To strike a balance between private interests of banks and the centralized responsibility of government
- To supervise and regulate banking institutions
- To protect the credit rights of consumers
- To manage the nation's money supply through monetary policy to achieve the sometimes-conflicting goals of
- maximum employment
- stable prices, including prevention of either inflation or deflation
- moderate long-term interest rates
- To maintain the stability of the financial system and contain systemic risk in financial markets
- To provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
- To facilitate the exchange of payments among regions
- To respond to local liquidity needs
- To strengthen U.S. standing in the world economy
Read more about this topic: Federal Reserve System
Famous quotes containing the word purpose:
“Your good mother tells me you are feeling very badly in your new situation. Allow me to assure you it is a perfect certainty that you will, very soon, feel better—quite happy—if you only stick to the resolution you have taken to procure a military education. I am older than you, have felt badly myself, and know, what I tell you is true. Adhere to your purpose and you will soon feel as well as you ever did.”
—Abraham Lincoln (1809–1865)
“Some of my friends spoke as if I was coming to the woods on purpose to freeze myself.”
—Henry David Thoreau (1817–1862)
“In criticism I will be bold, and as sternly, absolutely just with friend and foe. From this purpose nothing shall turn me.”
—Edgar Allan Poe (1809–1845)