What did the Federal Reserve Act of 1913 establish?

The Federal Reserve Act of 1913 was a pivotal piece of legislation in American financial history as it established the Federal Reserve System, which serves as the central bank of the United States. The creation of the Federal Reserve was a response to the banking panics and financial crises that plagued the nation in the late 19th and early 20th centuries. Its primary role is to provide the country with a safer, more flexible, and more stable monetary and financial system.

The Federal Reserve is responsible for combating inflation, managing employment levels, and overseeing the stability of the financial system by regulating and supervising banks. Its implementation allowed for a more organized approach to monetary policy, including the ability to adjust interest rates and control the money supply through various tools.

The other options represent different aspects of financial regulation but do not pertain to the foundation of the Federal Reserve. The National Banking System existed prior to the Federal Reserve Act, while the Community Reinvestment Act and the Truth in Lending Act were both established in later years to address specific lending practices and consumer protection within financial services. Therefore, the correct response highlights the establishment of the Federal Reserve system as a fundamental development in the structure of U.S. banking and finance.