The Federal Reserve System (also the Federal Reserve or informally as The Fed) is the central banking system of the United States. It was created in 1913 when the Federal Reserve Act was signed by Woodrow Wilson, and is composed of twelve regional banks which are located throughout the United States. Though each regional bank is officially owned by its corresponding member banks, the Federal Reserve System is often considered an independent government institution that has private aspects.

It does not operate for the purpose of making a profit. Today, the Federal Reserve's duties fall into four general areas: conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates; supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers; supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers; providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system. Within the Federal Reserve, the Federal Open Market Committee (FOMC) is primary responsible for the formulation of monetary policy.

Seven of the twelve members of the board are appointed by the President, and are called the "Board of Governors." The remaining five are regional Reserve Bank presidents. Since February 2006, Ben Bernanke has served as the Chairman of the Board of Governors of the Federal Reserve System. Donald Kohn is the current Vice Chairman (Term: June 2006–June 2010).

In early 1781 the Articles of Confederation & Perpetual Union were ratified so that Congress had the power to emit bills of credit. It passed later that year an ordinance to incorporate a privately subscribed national bank following in the footsteps of the Bank of England. However, it was thwarted in fulfilling its intended role as a nationwide central bank due to objections of "alarming foreign influence and fictitious credit," favoritism to foreigners and unfair competition against less corrupt state banks issuing their own notes, such that Pennsylvania's legislature repealed its charter to operate within the Commonwealth in 1785.

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