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The Formation of the Federal Reserve System

The passage of the Federal Reserve Act in 1913 was meant to correct some of the shortcomings of the national banking system that became apparent during a severe financial crisis of 1907. The goals of the legislation were to establish a monetary authority that would expand and contract the nation's money supply according to the needs of the economy.          

The passage of the Federal Reserve Act in 1913 was meant to correct some of the shortcomings of the national banking system that became apparent during a severe financial crisis of 1907. The goals of the legislation were to establish a monetary authority that would expand and contract the nation's money supply according to the needs of the economy.
It would also serve as a lender of last resort that could furnish additional funds to banks in times of financial crisis as well as serve as inefficient payment system for clearing and collecting checks at par which is basically face valueFree Web Content, throughout the country and also provide a more vigorous bank supervision system to reduce the risk of bank failures. With such a system in place one would think that there would be a climate that would foster best forex trading. But many traders can tell you that this is not the case.
The Federal Reserve System's ability to provide currency was established to eliminate the financial panics that had plagued the country when the public feared currency would not be available on demand. An elastic money supply was achieved by authorizing the Federal Reserve banks to issue a new type of banknote which is the Federal Reserve note. Member banks of the Federal Reserve System could obtain Federal Reserve notes whenever they needed extra currency. Today Federal Reserve notes are the principal form of currency in circulation. The Fed's ability to set interest rates grossly affects every aspect of the economy. The forex trading tips that are issued are often solely based on statements of the future intention of the chairman of the Federal Reserve to raise or lower interest rates. Only the president has such an effect on the economy with his statements but there is one difference tween him and the chairman. The president is elected.

Article Tags: Federal Reserve System, Federal Reserve, Reserve System

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ABOUT THE AUTHOR


Rhab Hendrik is an author who shares his forex trading strategies with others. He can always be counted on to help you learn forex systems and to help you learn forex trading fundamentals.



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