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
Famous quotes containing the word purpose:
“With the breakdown of the traditional institutions which convey values, more of the burdens and responsibility for transmitting values fall upon parental shoulders, and it is getting harder all the time both to embody the virtues we hope to teach our children and to find for ourselves the ideals and values that will give our own lives purpose and direction.”
—Neil Kurshan (20th century)
“A major misunderstanding of child rearing has been the idea that meeting a child’s needs is an end in itself, for the purpose of the child’s mental health. Mothers have not understood that this is but one step in social development, the goal of which is to help a child begin to consider others. As a result, they often have not considered their children but have instead allowed their children’s reality to take precedence, out of a fear of damaging them emotionally.”
—Elaine Heffner (20th century)
“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)