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Case Study: The Federal Reserve System

Case Study: The Federal Reserve System

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1. Why was the Federal Reserve System set up with 12 regional Federal Reserve Banks rather than one central bank?

The Federal Reserve System set up with 12 regional Federal Reserve Banks rather than one central bank because people feared and distrusted centralized power of the central bank. Therefore, the 12 regional Federal Reserve Banks were set up to distribute power throughout the regional dimensions.

2. Do you think the 14 year non-renewable terms for governors effectively insulated the Board of Governors from political pressure?

No, the 14 year non-renewable terms for governors did not effectively insulated the Board of Governors from political pressure, since the Board of Governors needs Congress and the president’s support

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