1913 Federal Reserve Act


DEFINITION of '1913 Federal Reserve Act'

The 1913 U.S. legislation that created the current Federal Reserve System. The Federal Reserve Act intended to establish a form of economic stability through the introduction of the Central Bank, which would be in charge of monetary policy, into the United States. The Federal Reserve Act is perhaps one of the most influential laws concerning the U.S. financial system.


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BREAKING DOWN '1913 Federal Reserve Act'

Prior to 1913, panics were common occurrences, as investors were unsure about the safety of their deposits. The Federal Reserve Act gave the 12 Federal Reserve banks the ability to print money in order to ensure economic stability. In addition to this task, the Fed had the power to adjust the discount rate/the fed funds rate and buy & sell U.S. treasuries.

  1. Monetary Policy

    Monetary policy is the actions of a central bank, currency board ...
  2. Overnight Rate

    The interest rate at which a depository institution lends immediately ...
  3. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  4. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  5. Quantitative Easing 2 – QE2

    The second round of the Federal Reserve's monetary policy used ...
  6. Term Fed Funds

    Funds that banks borrow from the Federal Reserve for longer than ...
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