The Federal Reserve SystemThe Federal Reserve System was established by Congress in 1913 to be the central bank of the United States. The Federal Reserve System was founded to be a safer, more flexible, and more stable monetary financial system. Over the years, the role of the Federal Reserve Board and its influence on the banking system and the economy has increased. Today, the duties of the Federal Reserve System fall into four general categories. First, the Fed conducts the nation's monetary policy. The Fed controls monetary policy by influencing credit conditions in the economy. The Fed measures its success in achieving these goals by assessing whether or not the economy is at full employment and whether or not prices are stable. The Fed not only controls monetary policy by influencing credit conditions in the economy, but also supervises and regulates banking institutions to ensure the safety and soundness of the nation's banking and financial system. The Fed protects consumers' credit rights. Third, the Fed maintains the stability of the financial system by controlling the risk that may arise in the financial markets. Fourth, it is also the responsibility of the Federal Reserve System to provide certain financial services to the U.S. government, the public, financial institutions, and foreign official institutions, including playing an important role in managing the nation's payments system. Before Congress created the Federal Reserve system, periodic moments of financial panic had plagued the nation. This panic had contributed to many bank failures, business failures, and general economic recessions. A particularly severe crisis in 1907 prompted Congress to establish the National Monetary Commission, which made proposals... middle of paper... regional Federal Reserve Bank. Monetary policy relating to open market operations is set by the FOMC. The policy regarding reserve requirements and the discount rate is determined by the Federal Reserve Bank. Another role in which the Federal Reserve plays an important role is the supervision and regulation of the US banking system. Review of institutions for safety and soundness – banking supervision – is shared with the Office of the Comptroller of the Currency, which oversees national banks, and the Federal Deposit Insurance Corporation, which oversees state banks that are not members of the Federal Reserve System. The establishment of the Federal Reserve in 1913 was indeed a great asset to American financial and well-being. Without the Federal Reserve, we would have no agency capable of controlling monetary policy and pushing the economy toward full employment.