The Federal Reserve System, often referred to as the Fed, is the central banking system of the United States of America. It was established on December 23, 1913, by the Federal Reserve Act to address banking panics that had occurred in the U.S. over the years. The Fed is composed of three key entities: the Board of Governors, the 12 Federal Reserve Banks, and the Federal Open Market Committee. The Board of Governors is a seven-member group appointed by the President of the U.S. and confirmed by the Senate. They oversee the Fed’s activities and make decisions on monetary policy. The 12 Federal Reserve Banks are responsible for carrying out the policies set by the Board of Governors and providing services to banks and other financial institutions in their respective regions. The Federal Open Market Committee, made up of the Board of Governors and five of the 12 Reserve Bank presidents, decides on the appropriate level of monetary policy in order to achieve maximum employment, stable prices, and moderate long-term interest rates. The Fed has a number of different tools at its disposal, including setting interest rates, conducting open market operations, and regulating banks and other financial institutions. It plays a crucial role in maintaining the stability of the U.S. financial system and ensuring the smooth functioning of the economy.