13: The Federal Reserve
- Page ID
- 287980
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Upon completion of this unit, you will be able to:
- Define the role and functions of a central bank and explain how it differs from commercial and investment banks
- Analyze the historical, political, and structural reasons the United States was late in establishing a central bank.
- Describe the causes and consequences of the Panic of 1907 and explain how it led to the creation of the Federal Reserve System.
- Summarize the purpose and key provisions of the Federal Reserve Act of 1913.
- Identify the three main components of the Federal Reserve System and describe their roles in monetary policy and banking oversight.
- Explain how the decentralized structure of the Federal Reserve reflects the U.S. tradition of balancing centralized authority with regional independence.
- Discuss how private commercial banks participate in the Federal Reserve System and the nature of their required stock ownership.
- Evaluate the role of the Federal Open Market Committee (FOMC) in setting monetary policy, including the federal funds rate and the Interest on Reserve Balances (IORB).
- Compare the functions of commercial and investment banks and assess how banking regulations changed after the 2008 financial crisis.
- Explain why the Federal Reserve is considered a “quasi-governmental” institution and describe the blend of public and private features within its structure.


