What Is the Federal Reserve System?

The Federal Reserve System, or The Fed for short, is responsible for performing the duties of the Central Bank of the United States. This system was established on December 23, 1913 under the Federal Reserve Act. The Federal Reserve's core governing body is the Federal Reserve. ^[1]

US Federal Reserve System

The Federal Reserve System (The Federal Reserve for short) is responsible for performing

The US Federal Reserve System is the central bank of the United States. Compared with the central banks of other countries, the Federal Reserve was born later as the central bank of the United States. Historically, the United States has repeatedly tried to establish a central bank like the Federal Reserve, but failed because lawmakers and the president feared that the central bank would be too powerful or that it would be abducted by a few interest groups. This worry is largely determined by the state of the United States. At the beginning of the founding of the United States, the United States was a loose organization composed of some independent states in the form of a federation. Most of the executive power was concentrated in the state government, not the federal government. As a result, the idea of setting up a federal agency such as the central bank would alarm states, fearing that the federal government would use this name to expand its powers. ^[5]

The Federal Reserve is made up of the Federal Reserve in Washington and 12 Federal Reserve Banks across the United States. The Federal Reserve's main monetary policy is jointly formulated by members of the Federal Reserve Board and the chairman of the Federal Reserve Bank. To avoid too much policy decision-making power in a few regions (such as Washington and New York).

The First Bank and the Second Bank of the United States were eventually closed because they were not accepted by the public. One of the important reasons is that both banks are located in Philadelphia in the northeast of the United States. And not all Americans. The Fed carefully learned this lesson when it was founded.

In terms of organization, the Federal Reserve uses a dual organizational structure of federal government agencies and non-profit institutions, thereby avoiding the complete concentration of monetary policy in the hands of the federal government. One of the original intentions of the Federal Reserve to set up the 12 Federal Reserve Banks as non-profit institutions rather than government agencies was to take into account the voices of the government and the private sector when formulating monetary policy. Although the Federal Reserve in Washington is part of the U.S. federal government, the 12 Federal Reserve Banks are not part of the federal government agency, but are not-for-profit private organizations. But it needs to be emphasized that the Federal Reserve Bank is different from ordinary private organizations. The Federal Reserve Bank is not for profit, but works with the Federal Reserve to perform the public functions of the US Central Bank.

Twelve Federal Reserve Banks are currently headquartered in

The top decision-making bodies for the Federal Reserve's monetary policy include the seven members of the board of governors and the twelve presidents of the federal reserve banks. The Fed's most important monetary policy is called

The revenue of the Federal Reserve System mainly comes from the following aspects: ^[5]

In the early morning of March 17, 2016, Beijing time,

At 2 p.m. local time on July 31, 2019 and at 2 a.m. on August 1, Beijing time, the US Federal Reserve announced that it would lower the target rate of the federal funds rate by 25 basis points to a level of 2% to 2.25%. This is the first time the Fed has cut interest rates since December 2008. ^[3]

In the early morning of September 19, 2019, Beijing time, the Federal Reserve once again announced a 25-basis-point rate cut and lowered the target range of the federal funds rate to 1.75% -2.00%. ^[11]