The role of Federal Reserve in the US Financial System
The Federal Reserve System is the central banking system of the United States. The Federal Reserve System is composed of several layers. It is governed by the presidentially-appointed board of governance or Federal Reserve Board. In response to the financial panic of 1907 The Fed was established by the President Woodrow Wilson on 23 Dec. 1913.
Before that the U.S. was the only major financial power without a central bank. Its creation was precipitated by repeated financial panics that afflicted the U.S. economy over the previous century, leading to severe economic disruptions due to bank failures and business bankruptcies. A crisis in 1907 led to calls for an institution that would prevent panics and disruptions.