The US banking system

Until a certain time, the banking system of the United States was decentralized. There were several tens of thousands of banks in the country, however, they did not submit to the state. In fact, each of them had its own policy. In small American cities 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 took a different path. To establish control over all institutions in this area, a federal reserve system was created. A government decree has organized several banks. With their help, the state was able to monitor the activities of private structures.

Any federal reserve bank can be called a "bank for the bank", as well as a government bank. After all, private institutions were required to give a certain part of the funds to the units of such organizations. At the same time, only the banks of the Federal Reserve have set quotes and terms of exchange. Today in America there are several types of banking institutions. First of all, this, of course, the elements of the structure of the Fed. Next come private banks, investment organizations and bank offices. Today, there is almost no difference between them, because both the investment bank and the private bank can place funds in the shares. The Federal Reserve System has the exclusive right to sponsor the state. It is this organization that buys valuable bonds that are issued by the government.

However, income and profits from this go 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 period of 14 years. The Senate can influence the chairman and the entire FRS system. But the president hardly has such an opportunity. Elections of the chief person in the federal banking system are conducted by senators. The chairman has the opportunity to take up this post and the second time if he is elected by a majority vote. This is what happened during the re-elections 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. Thus, in the late 18th - early 19th centuries, the First Bank of the United States existed. 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 came the so-called "era of free banking systems." Then the National Bank was established. And in the early 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 one being a lack of liquidity.

The third centralized system was developed not only due to its high liquidity and the availability of a sufficiently elastic currency, but also because of one extreme circumstance - panic. With its long existence, and especially the strengthening of its positions on American soil, the federal banking system owes a 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, it is also his responsibility to participate in international money transactions on behalf of the US government, consumer protection, control over private structures and much more. The Fed also deals with liquidity problems and adjusts quotes. The US banking system has become more organized.