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FEDERAL RESERVE SYSTEM, central banking system of the United States. Established in 1913, it brought to a decisive end the cycle of regional banking panics and minor recessions which had plagued the nation since the Civil War.

Though created by an act of Congress, the Federal Reserve is actually a semi-private institution, combining the transparency and public interest of a commercial bank with the efficiency and accountability of a government agency. This unique arrangement ensures that the conduct of America’s monetary policy remains insulated from political tampering and economic verities.

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