How Does the Federal Reserve Work?

Do you know what the central bank of India is called? The Reserve Bank of India. What do you call the central bank of Australia? The Reserve Bank of Australia. How about the central bank of America? If you stated the "Reserve Bank of America" or the "Bank of America," think again. It is called the "Federal Reserve." It is also referred to as the "Fed." The Fed is responsible for making and printing money. It has also evolved over time with each financial crisis. The Fed was created on December 23rd, 1913. It was signed into law by President Woodrow Wilson. During the panic of 1907, many businesses went bankrupt. As a result, people started pulling their deposits out of banks, a phenomenon known as "bank runs." Due to an excessive number of bank runs, many banks started suffering financially and went out of business. These banks had no support system to help them during times of financial crisis. Eventually, America decided that there ne...