What did the Federal Reserve Act of 1913 establish?

The Federal Reserve Act of 1913 established a central banking system in the United States, known as the Federal Reserve System. This legislation aimed to create a more stable and secure financial system by centralizing and regulating the country's banks. Prior to the establishment of the Federal Reserve, the U.S. experienced financial panics and bank failures, highlighting the need for a more effective monetary policy and banking structure.

The Federal Reserve System serves several critical functions, including controlling the money supply, providing financial services to depository institutions, and acting as a lender of last resort during financial crises. This central banking system plays a key role in managing inflation and stabilizing the economy through its monetary policy tools, such as adjusting interest rates and conducting open market operations.

The establishment of a national currency, stock market regulations, and tax collection systems are important aspects of the financial framework, but they are not the primary focus of the Federal Reserve Act. The Act's most significant contribution was the creation of a centralized banking authority that addresses the complexities of the U.S. financial system.