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Like most industrialized nations, the United States has an independent central bank to provide a safe and flexible monetary and financial system. However, the U.S. Federal Reserve System—often called the Fed—is different from most central banks because of its unique structure. The Fed is a "decentralized central" bank, consisting of the Board of Governors in Washington, D.C., a network of 12 regional Federal Reserve Banks and their branches, and the Federal Open Market Committee (FOMC).

In December 1913, the Federal Reserve Act established the Federal Reserve System to remedy the conditions underlying the money panics that had plagued the country for many years. Congress has amended the act several times since to enhance the Fed's ability to foster a sound financial system and a healthy economy.

The Federal Reserve System advances this goal in several ways. Its monetary policy decisions affect the flow of money and credit in the economy. It contributes to the safety and soundness of the nation's financial system by establishing regulations and supervising commercial banks. And by providing a variety of financial services to depository institutions and the federal government, the Fed helps the payments system work efficiently. In carrying out these three functions, the Fed also helps to stabilize the financial system and to contain systemic risk in financial markets.