The Federal Reserve is the central bank of the United States, created by Congress in 1913 to supply an elastic currency and act as a lender of last resort after a century of recurring bank panics. Built as twelve regional banks coordinated by a board in Washington, it now issues the nation's money and sets the interest rate that prices credit across the economy. Its independence from elected officials, and the reach of its power, have been contested since its founding.
For most of the nineteenth century the United States had no central bank, and it paid for the absence in ruin. Roughly every decade a panic struck: depositors rushed to pull out cash, banks that were sound one week failed the next, and no institution had the power or the duty to stop the run. In 1907 a private banker, J. P. Morgan, reportedly locked rival financiers in his library until they agreed to pool their money and rescue the system. The most powerful economy on earth had been saved by one aging man's will. That a single financier could do what no public body could frightened the country into building one that would never again depend on him.