DSST Money & Banking Practice Exam

The Federal Reserve was created by the Federal Reserve Act, which was passed in 1913. This act established the US National Monetary Commission's recommendations to create a central banking system in the United States, designed to provide the nation with a safer, more flexible, and more stable monetary and financial system.

The Aldrich-Vreeland Act of 1908 is related because it addressed banking reform in response to financial panics and laid some groundwork for the eventual creation of the Federal Reserve, but it did not itself create the Federal Reserve. Instead, it primarily authorized the establishment of a temporary emergency currency, which pointed towards the need for a more permanent institutional solution. The other acts mentioned, such as the Securities Exchange Act and the Glass-Steagall Act, tackled different financial issues, focusing on market regulations and separating commercial and investment banking, respectively. The key function of the Federal Reserve Act was to establish a federal reserve system that could respond to banking crises and facilitate a clearer monetary policy.