The banking system of the United States until a certain time was decentralized. There were several tens of thousands of banks in the country, however, they were not subordinate to the state. In fact, each of them had its own policy. In the small towns of America, such institutions could establish their own monopolies, especially if they were established by large industrial holdings. However, at the beginning of the 20th century, the development of the US banking system went a different way. To establish control over all institutions in this area, a federal reserve system was created. A government decree organized several banks. With their help, the state was able to track the activities of private entities.
Any federal reserve bank can be called a "bank for a bank", as well as a government bank. After all, private institutions were obliged to give a certain part of the funds to units of such organizations. At the same time, only Fed banks began to establish quotes and exchange conditions. There are several types of banking institutions in America today. First of all, these are, of course, elements of the Fed structure. Next are private banks, investment organizations and bank offices. Today, there is almost no difference between them, because both an investment and a private bank can place funds in shares. The Federal Reserve has the exclusive right to sponsor the state. It is this organization that buys the valuable bonds that are issued by the government.
However, the income and profits from this goes to large holdings and industrial companies. Because the state, in turn, prefers to invest the funds received in these organizations. The US Federal Banking System has a central office located in Washington. The head of this unit is elected chairman or president for a term of 14 years. The Senate can influence the chairman and the entire Fed system. But the president is unlikely to have such an opportunity. The election of the main person in the federal banking system is held by senators. The chairman has the opportunity to take this position a second time, if he is elected by a majority vote. This is exactly what happened during the re-election in 2009.
The US banking system has gone through six main stages. The country has already tried to introduce a previously unified system, but it did not work out. So, in the late 18th - early 19th century, there was the First Bank of the United States. Then for a short time there was not a single centralizing force in this sector. A little later, the Second Bank of the United States was formed. Soon the so-called "era of free banking systems." Then the National Bank was established. And at the beginning of the 20th century, the Fed appeared. The first two centralizing systems were not successful. They did not receive an extension of the contract. The first of these banks was founded by Hamilton. Both organizations had several shortcomings, the main of which was a lack of liquidity.
The third centralized system was developed not only due to its high liquidity and the availability of a sufficiently flexible currency, but also because of one extraordinary circumstance - panic. The federal banking system owes its long existence, and especially the strengthening of its position on American soil, to the financial crisis that occurred in 1907.
The panic that he caused was the reason why the state urgently decided to take control of the activities of private banking organizations. And the government succeeded. The Fed has a lot of functions. In addition to being considered a national state bank, his responsibilities also include participating in international money transactions on behalf of the US government, protecting consumers, controlling private entities and much more. The Fed also deals with liquidity issues and adjusts quotes. The US banking system has become more organized.