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The Federal Reserve System (also known as the Federal Reserve, and informally as The Fed) is the central banking system of the United States. It was created in 1913 with the enactment of theFederal Reserve Act, and was largely a response to a series of financial panics, particularly a severe panic in 1907.[1][2][3] Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has evolved.[2][4] Events such as the Great Depressionwere major factors leading to changes in the system.[5] Its duties today, according to official Federal Reserve documentation, are to conduct the nation's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions.[6]

The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous other private U.S. member banks and various advisory councils.[7][8][9] The FOMC is the committee responsible for setting monetary policy and consists of all seven members of the Board of Governors and the twelve regional bank presidents, though only five bank presidents vote at any given time. This division of responsibilities of the central bank falls into several separate and independent parts, some private and some public. The result is a structure that is considered unique among central banks. It is also unusual in that an entity (the United States Department of the Treasury) outside of the central bank creates the currency used.[10]

According to the Board of Governors, the Federal Reserve is independent within government because "its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government." However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects.[11] The U.S. Government receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. The Federal Reserve transferred a record amount of $45 billion to the U.S. Treasury in 2009.[12]

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Finance, Banks, Money, Currencies, Foreign Exchange, Banking System, Central Banks

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Quick Tip by . November 12, 2010
Keeping interest rate as low as it had for the longest period has had the financial markets and investment sector having the party of the century until it turned into the nightmare of all time. Now, Alan Greenspan retired and the Fed (imho) has lost its touch. Granted, many blamed Greenspan for the current trouble, just as we all did with Bush. So, what will the Fed do in the future? Keep interest rate as low as it had and export inflation all over the world?
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