Taroyan Margarita IE-11(E) History of the monetary system Importance Bank and value of the dollar regulation in the United States Monetary policy International debt In 1792 Congress of USA was given the power to create and establish a national monetary system. At that time, Congress passed the Coinage Act and made the dollar the nations primary monetary unit. The precondition was a sharp rise in population and a big increase in trade and commerce. The Coinage Act of 1792 was based on the use of gold and silver reserves but because of the scarcity of the precious metals at the time, adjustments in value occurred frequently. After gold was discovered in California, revision of the coinage laws and the mint ratio of gold and silver coins increased. One Cent - 1/100 of a Dollar, also called a Penny Five Cents - 5/100 of a Dollar, also called a Nickel Ten Cents - 10/100 of a Dollar, also called a Dime Twenty Five Cents - 25/100 of a Dollar (aka 1/4, or Quarter Dollar) Fifty Cents - 50/100 of a Dollar (aka 1/2, or Half Dollar) One Dollar - 100/100, 1 full Dollar (Susan B. Anthony type) One Dollar - 100/100, 1 full Dollar (Sacagawea type) In 1913, the Federal Reserve Act was passed authorizing the establishment of regional Federal Reserve Banks (Federal Reserve System) that issue money to member banks by drawing on their own deposits or by borrowing commercial paper if their deposit balances with the Federal Reserve are insufficient. The presidentially appointed Board of Governors (or Federal Reserve Board), an independent federal government agency located in Washington, D.C. The Federal Open Market Committee (FOMC), composed of the seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank presidents, which oversees open market operations, the principal tool of U.S. monetary policy. Twelve regional Federal Reserve Banks located in major cities throughout the nation, which divide the nation into twelve Federal Reserve districts. The Federal Reserve Banks act as fiscal agents for the U.S. Treasury, and each has its own nine-member board of directors. Numerous other private U.S. member banks, which own required amounts of non-transferable stock in their regional Federal Reserve Banks. Various advisory councils. is highly fragmented compared with other G10 countries, where most countries have only one bank regulator. In the U.S., banking is regulated at both the federal and state level. Depending on the type of charter a banking organization has and on its organizational structure, it may be subject to numerous federal and state banking regulations. Within the Federal Reserve Board are 12 districts centered around 12 regional Federal Reserve Banks, each of which carries out the Federal Reserve Board's regulatory responsibilities in its respective district. The Federal Reserve controls the three tools of monetary policy-open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services. The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907. Over time, the roles and responsibilities of the Federal Reserve System have expanded, and its structure has evolved. Events such as the Great Depression in the 1930s were major factors leading to changes in the system.