Economics

1. The nations first paper money known as continental was printed to finance the American Revolution. Produced by the Continental Congress, the fiat money notes were issued in large quantity that they led to inflation. People eventually lost faith in the notes giving birth to the phrase not worth a continental which means utterly worthless.
2. The Federal Reserve System was born in 1913. President Woodrow Wilson signed the Federal Reserve Act studied, created, and reviewed by Virginia Rep. Carter Glass and adviser H. Parker Willis.
3. Located in Washington D.C., the Board of Governors leads the Federal Reserve System. There are seven governors in the board, each appointed by the President and confirmed by the Senate.
4. The Federal Reserve System has approximately 3,000 member banks composed of 38 of the commercial banks in the United States. There are also about 17,000 other depository institutions that are subject to the regulations of the System.
5. The Federal Reserve has three instruments of monetary policy namely open market operations, the discount rate, and reserve requirements. Open market means that instead of the FED deciding on which securities dealers it will do business with, the choice emerges from various dealers who would compete on the basis of price.
6. The Federal Reserve also acts as a fiscal agent. It serves as a bank to the federal government providing financial services to the United States Department of Treasury. It also sells and redeems government securities such as Saving Bonds and Treasury Bills.
7. Reserve Bank presidents are obliged to retire by the age of 65. Those who are initially appointed after the age of 55 however, can, with the decision of the board of directors, be permitted to continue serving until the age of 70 or until they reach 10 years of service, whichever comes first.
8. There are three advisory councils that advise the Board of Directors directly. They are the Federal Advisory Council, Consumer Advisory Council, and the Thrift Institutions Advisory Council. Aside from these, there are also other committees that consult with individual Reserve Banks on matters such as agriculture and small business.
9. The Federal Advisory Council members meet with the Board of Governors four times a year to discuss economic and banking matters. Members of the Council come from each Reserve District and are most commonly commercial bankers.
10. The first attempt to centralize banking came in the form of the First Bank of the United States with headquarters in Philadelphia. It was established by the Congress in 1971 at the urging of Alexander Hamilton, the Secretary of Treasury. In 1811, the banks 20-year charter expired and the Congress refused to renew it by just one vote.