The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Federal Reserve System

  • Donald D. Hester
Reference work entry


The Federal Reserve System was established in 1913 to provide the United States with an elastic currency. It managed security offerings to finance the First World War, and evolved from a set of 12 semi-autonomous banks to a centralized institution in the 1920s. Having failed to prevent the Depression of the early 1930s, it was substantially reorganized in 1933 and 1935. After the Second World War and a 1951 accord reached with the Treasury, it started on an odyssey of monetary policy interventions, employing many policy instruments, indicators, and powers with varying degrees of success to the present day.


‘Availability of credit’ doctrine Accord (1951) Availability of credit Bank holding companies Bank Holiday Central banking Commercial paper Deposit turnover Depository Institutions Deregulation and Monetary Control Act Discount rate Discount window Discretionary monetary policy Eligible paper; exchange rates Federal funds Federal reserve system Federal Open Market Committee (FOMC) Financial deregulation Financial holding company Financial Services Modernization Act Free gold Garn–St Germain Act Glass–Steagall Act Gold standard Great Depression Inflation Meltzer, A. Money supply measures Net free reserves Open-market operations Real bills doctrine Repurchase agreements Reserve requirement Retail sweep programmes Riefler–Burgess doctrine Unemployment 

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Donald D. Hester
    • 1
  1. 1.