The creation of the Federal Reserve System was driven by banking panics, leading to the establishment of the Fed to stabilize the banking industry.
The creation of the Federal Reserve System by Congress in 1913 was largely encouraged by banking panics. Financial panics, such as the Panic of 1907, highlighted the need for a central bank to serve as a lender of last resort and stabilize the banking industry. The Federal Reserve Act aimed to address these issues by establishing the Fed with the power to influence monetary policy, supervise banks, and provide financial services.
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