The **Federal Reserve System (Fed)** is the central bank of the United States, created by Congress in 1913 to provide a safer, more flexible, and stable monetary and financial system[1][2]. It consists of a Board of Governors in Washington, D.C., and 12 regional Reserve Banks located across the country, each serving distinct districts, collectively overseeing national monetary policy, financial supervision, and payment services[1]. The Fed’s core responsibilities include **conducting monetary policy**, **regulating and supervising banks**, and **maintaining an effective payments system**[1][3]. Its most visible function is managing monetary policy to influence money supply and credit with the goals of **price stability** and **maximum sustainable employment**, a dual mandate established by legislation in the 1970s[3]. To achieve this, the Federal Open Market Committee (FOMC) targets the federal funds rate, guiding interest rates and liquidity through tools like open market operations and reserve requirements[3]. Historically, the Fed was established after two previous central banks failed in the 19th century, responding to early 20th-century financial turbulence with a hybrid federal-regional system designed to balance centralized control and local insight[2]. The Federal Reserve’s decentralized structure allows it to closely monitor economic conditions nationwide and respond to regional challenges[2]. Key achievements include successfully navigating multiple financial crises by ensuring liquidity and financial stability, and continuously evolving its monetary policy framework. The Fed conducts a comprehensive review of its monetary strategy every five years, with the latest in 2025 incorporating public feedback and academic research to refine its approach to stabilizing the economy[4][7][9]. The 2025 update reaffirmed commitment to its dual mandate, emphasizing transparency and adaptability[5]. Currently, the Fed is managing the transition from pandemic-era monetary expansions by shrinking its balance sheet to maintain adequate liquidity while continuing to influence interest rates effectively within an ample reserves framework[6]. Its independence and nonpartisa