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7 March, 01:56

The primary reason for the creation of the federal reserve system loading ... was:

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  1. 7 March, 02:16
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    My answer is going to leave out interest rates. That's currently one of its main functions.

    The Federal Reserve was created in 1913 because of a devastating bank collapse in 1907. What happened was that when 1 bank got into trouble, people panicked because they were afraid their bank would be next. The worst thing that can happen to a bank is a great many withdrawals take place all at once. When that happens the bank does not have enough resources to meet the demand. All of your money is being loaned out to other customers. This is extremely well explained in "It's a Wonderful Life" starring Jimmy Stewart and Donna Reed.

    To stop these runs, congress in 1913, wrote the Federal Reserve Bank Act. If a bank got into trouble, it was the institution that was intended to bring stability to the nation. In other words, it made loans to banks that were in trouble.
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