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Federal Reserve System

The Federal Reserve System was set up in 1913 by the Federal Reserve Act to regulate the banking and money system in the United States.

Expanded Definition

The Federal Reserve System is the central bank of the U.S., with goals including "shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."

The Federal Reserve (aka the Fed) is made up of a Federal Reserve Board of governors (seven members) and 12 regional Federal Reserve Banks.

It is an independent entity within the government -- its decisions do not have to be OK'd by the president or Congress, and the Fed is not funded by Congress. However, board of govenor members are appointed by the president and approved by the Senate, and the Federal Reserve works to further government objectives, i.e. monetary policy.

This link goes to a frequently asked questions page of the Federal Reserve website.

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