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:
“Our policy is directed not against any country or doctrine, but against hunger, poverty, desperation and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.”
—George Marshall (1880–1959)
“To me the sole hope of human salvation lies in teaching Man to regard himself as an experiment in the realization of God, to regard his hands as God’s hand, his brain as God’s brain, his purpose as God’s purpose. He must regard God as a helpless Longing, which longed him into existence by its desperate need for an executive organ.”
—George Bernard Shaw (1856–1950)
“I have sought his aid—but if after endeavoring to do my best in the light which he affords me, I find my efforts fail, I must believe that for some purpose unknown to me, He wills it otherwise.”
—Abraham Lincoln (1809–1865)