As the Federal Reserve System turns 100 this year, it is important to understand how its structure came to be and how it still serves the U.S. well today. In this three-part video series from our Timely Topics from the St. Louis Fed series, David Wheelock, St. Louis Fed vice president and deputy director of research, explains the history and benefits of this unusual structure.
Part 1: Born Out of Compromise
When the Federal Reserve System was first being discussed, differing schools of thought emerged on how it should be structured. The regional structure of the System we know today was created through balancing public and private interests.
Part 2: Serving Main Street
One of the charges of the Federal Reserve System was to provide additional money to the banking system when demand was high to help stem the possibility of bank runs or panics. The regional structure also helps those involved with guiding the nation’s monetary policy to better gather information on economic conditions in the U.S.
Part 3: No Groupthink
The Fed’s regional structure helps address the problem of groupthink among monetary policy decision makers by facilitating debate through diverse opinions.