History

Question

The Federal Reserve Act of 1913 established the Federal Reserve System. What was the purpose of setting up the Federal Reserve System?

2 Answer

  • The purpose was to make the economy and the military stronger, to do that, banks needed to be built, so, if the money was flowing was, that meant the economy was good, and more money was coming to the government. They can use that to strengthen the country defenses.
  • Before the Federal Reserve Act of 1913 was passed, many state and local banks, businesses and trust companies entered in bankruptcy and many investors were unsure of the safety of their bank deposits. The Act, then, was created to establish the central bank of the United States: the Federal Reserve System, with the purpose to establish and keep economic stability in the nation, through the management of the country's money supply, the supervision of monetary policy, the making of loans and the supervision and regulation of financial institutions practices.

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