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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  1. Who determines the reserve ratio?

    The Federal Reserve of the United States of America is the regulatory entity that determines the reserve ratio, and therefore ... Read Full Answer >>
  2. Who decides to print money in Canada?

    In Canada, new money comes from two places: the Bank of Canada (BOC) and chartered banks such as the Toronto Dominion Bank ... Read Full Answer >>
  3. What are the risks of annuities in a recession?

    Annuities come in several forms, the two most common being fixed annuities and variable annuities. During a recession, variable ... Read Full Answer >>
  4. Who decides when to print money in India?

    The Reserve Bank of India, or RBI, manages currency in India. The bank's additional responsibilities include regulating the ... Read Full Answer >>
  5. Is Japan an emerging market economy?

    Japan is not an emerging market economy. Emerging market economies are characterized by low per capita incomes, poor infrastructure ... Read Full Answer >>
  6. How is the Federal Reserve audited?

    Contrary to conventional wisdom, the Federal Reserve is extensively audited. Politicians on the left and right of a populist ... Read Full Answer >>

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