... functional operating financial system. There are three important requirements for a banking system to operate functionally and that includes first an efficient national system, second an "elastic" or "flexible" money supply such as fiat money which is backed by government, and third a lending and borrowing mechanism. Those three base requirements is where the Federal Reserve System comes into action, because it carries out all those functions and many more set by the Federal Reserve System What is the Federal Reserve System? The Federal Reserve, the central bank of the United States, was founded by Congress in 1913 to provide the nation with a safer, more flexible, more stable monetary and financial system. One of the main responsibilities of the Federal Reserve is that it acts as the bank for all financial institutions in the United States. Think of it as the main branch of every bank in the country. ...

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