The Federal Reserve Act created a system of private and public entities. There were to be at least eight and no more than twelve private regional Federal Reserve banks. The Federal Reserve Board, consisting of seven members, was created as the governing body 1913 federal reserve act pdf the Fed.
Each member is appointed by the President of the U. S and confirmed by the U. In 1935, the Board was renamed and restructured. The Federal Reserve Act created a national currency and a monetary system that could respond effectively to the stresses in the banking system and create a stable financial system. With the goal of creating a national monetary system and financial stability, the Federal Reserve Act also provided many other functions and financial services for the economy, such as check clearing and collection for all members of the Federal Reserve. With the passing of the Federal Reserve Act, Congress required that all nationally chartered banks become members of the Federal Reserve System.
These banks were required to purchase specified non-transferable stock in their regional Federal Reserve banks, and to set aside a stipulated amount of non-interest bearing reserves with their respective reserve banks. Since 1980, all depository institutions have been required to set aside reserves with the Federal Reserve. Such institutions are entitled to certain Federal Reserve services. State chartered banks were given the option of becoming members of the Federal Reserve System and in the case of the exercise of such option were to be subject to supervision, in part, by the Federal Reserve System. Federal Reserve stock, and to other services.
Central banking has made various institutional appearances throughout the history of the United States. The government was burdened with large wartime debts, and the new republic needed a strong financial institution to give the country a resilient financial footing. US could benefit from a European-style national financial institution. Hamilton was in favor of building a strong centralized political and economic institution to solve the country’s financial problem.