Abstract

On December 23, 1913, President Woodrow Wilson signed into law the Federal Reserve Act. With this law, Congress established a central banking system which would enable the world’s most powerful industrial nation to manage its money and credit more effectively than ever before. The political and legislative struggle to create the Federal Reserve System was long and often bitter, and this final product in 1913 was the result of a carefully crafted and somewhat tenuous political compromise between national and regional powers. Since its founding, the Federal Reserve System has evolved to meet the needs of a changing financial system and a growing economy, while its unique structure remains its greatest strength. This paper describes the history, structure, and functions of the Federal Reserve System. The Federal Reserve’s role in the international sphere will be examined, as well as its impact on the national economy.

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