. and what are the advantages and disadvantages of it when facing a financial crisis?
The Federal reserve was signed into power by president Woodrow Wilson, in 1913 to act a central bank for the united states. In a recession the Fed lowers interest rates to allow more borrowing and more money in the system. During times of inflation the Fed increases interest rates to contract money in the money supply. To put things more technically, its obligations are: 1. Conducting the nation's monetary policy by influencing monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates 2. Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system, and protect the credit rights of consumers 3. Maintaining stability of the financial system and containing systemic risk that may arise in financial markets 4. Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
