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Why Was The Federal Reserve Formed?

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History Of The Federal Reserve
Why was it formed?
The federal reserve was formed due to financial crises which caused massive problems not just for the bank that was falling but for all banks. One bank falling would cause a huge panic in which people rushed to their banks to pull out their deposits. The panic caused by one bank falling caused a domino effect on other banks. As one bank failed people not even using that bank saw the panic and would withdraw their deposits even when a bank was not in any danger of failing. Because of the widespread panics that were driving banks out of business banks needed an emergency reserve so in times of panic they would have the supply to keep up with the demand of the withdrawals. Due to the severe panic in 1907, that wreaked havoc on the banking systems, it led to Congress creating the federal reserve act. The federal reserve regulates banks and makes emergency loans if they ever run short of money so there would be fewer panics. The federal reserve is known as the lender of last resort in times of crisis. ( ONE )

When was it formed?
One of the banking regulatory agencies is the federal reserve board which was created and established by Congress. The federal reserve was signed into effect on December 23rd of 1913 by president Woodrow Wilson.
Who were the main people to form it?
In 1907 there was …show more content…

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