Federal Reserve

The Federal Reserve System, referred to as the Federal Reserve or the Fed, is the United States of America’s central banking system.

On December 23, 1913, the Federal Reserve Act created the system after a series of financial shocks caused the need for central control of monetary policy to prevent future crises.

What is the role of the US Federal Reserve?

The Federal Reserve System is the United States central bank. It performs five functions to promote the US economy’s effective operation and protect its interest.

The Fed governs the nation’s monetary policy to encourage maximum employment and price stability, while controlling interest rates and inflation in the US economy
The Fed promotes financial stability and seeks to control and contain risks by active monitoring and engagement in the US and overseas
It underpins the safety and compliance of financial institutions while monitoring their financial system’s impact
It harnesses payments and settlements safety and efficiency through services to the banking industry and the US government
The Fed promotes both consumer protection and community development through supervision and examination, and the administration of consumer laws and regulations

Search the Glossary

Look up the meaning of hundreds of trading terms in our comprehensive glossary.

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z

Popular definitions