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[[Image:Federal Reserve.jpg|right|thumb|300px|The Federal Reserve headquarters in Washington, DC.]]

[[Image:Federal Reserve.jpg|right|thumb|300px|The Federal Reserve headquarters in Washington, DC.]]

The '''Federal Reserve''' (also known as '''The Fed''') is a central banking system that controls the monetary system of the [[United States]].  

The '''Federal Reserve''' (also known as '''The Fed''') is a central banking system that controls the monetary system of the [[United States]].  

It was established by the Federal Reserve Act, which was passed by Congress and signed into law by [[President]] [[Woodrow Wilson]] in 1913.  "... the Board is a federal government agency consisting of seven members appointed by the President of the United States and confirmed by the U.S. Senate."<ref>[http://www.ny.frb.org/aboutthefed/fedpoint/fed46.html Board of Governors of the Federal Reserve System] - Fedpoints -  Federal Reserve Bank of New York</ref> The Federal Reserve is a system of private banks, twelve of which are designated as Federal Reserve Banks and have some features of public federal agencies. The Federal Reserve is headed by a Board of Governors and a Chairman. The current Chairman is [[Ben Bernanke]], a Republican appointed by President [[George W. Bush]]; his predecessor was [[Alan Greenspan]], a Republican appointed by President [[Ronald Reagan]].  

It was established by the Federal Reserve Act, which was passed by Congress and signed into law by [[President]] [[Woodrow Wilson]] in 1913.  As it describes itself, "the Board is a federal government agency consisting of seven members appointed by the President of the United States and confirmed by the U.S. Senate."<ref>[http://www.ny.frb.org/aboutthefed/fedpoint/fed46.html Board of Governors of the Federal Reserve System] - Fedpoints -  Federal Reserve Bank of New York</ref> The Federal Reserve is a system of private banks, twelve of which are designated as Federal Reserve Banks and have some features of public federal agencies. The Federal Reserve is headed by a Board of Governors and a Chairman. The current Chairman is [[Ben Bernanke]], a Republican appointed by President [[George W. Bush]]; his predecessor was [[Alan Greenspan]], a Republican appointed by President [[Ronald Reagan]].  

One of the main jobs of the Federal Reserve is to control [[inflation]] by adjusting the supply of money in the economy, while at the same time maintain the stability of the financial system and promote economic growth. This is done by buying and selling government bonds in order to influence banks' cash supply (called "open market operations"), setting the amount of money that banks must keep in reserve, and setting the interest rates for money it lends to banks (the Fed's lending facility is called the "discount window").<ref>http://www.federalreserve.gov/pf/pdf/pf_3.pdf</ref> These three major operations are the basis of [[monetary policy]], and are performed by the Fed to target a specific [[Federal Funds Rate]] that it believes will be low enough to ensure available credit and stimulate the economy, but high enough to prevent inflation. The Fed also has the responsibility of supervising and regulating banking institutions.<ref>http://www.federalreserve.gov/generalinfo/mission/default.htm</ref>

One of the main jobs of the Federal Reserve is to control [[inflation]] by adjusting the supply of money in the economy, while at the same time maintain the stability of the financial system and promote economic growth. This is done by buying and selling government bonds in order to influence banks' cash supply (called "open market operations"), setting the amount of money that banks must keep in reserve, and setting the interest rates for money it lends to banks (the Fed's lending facility is called the "discount window").<ref>http://www.federalreserve.gov/pf/pdf/pf_3.pdf</ref> These three major operations are the basis of [[monetary policy]], and are performed by the Fed to target a specific [[Federal Funds Rate]] that it believes will be low enough to ensure available credit and stimulate the economy, but high enough to prevent inflation. The Fed also has the responsibility of supervising and regulating banking institutions.<ref>http://www.federalreserve.gov/generalinfo/mission/default.htm</ref>