Federal Reserve System

Definition of Federal Reserve System

Network of twelve central banks to which most national banks belong and to which state chartered banks may belong. Membership rules require investment of stock and minimum reserves. The Federal Reserve System was established in 1913 to give the country an elastic currency, provide facilities for discounting commercial paper and to improve the supervision of banking.

The System consists of five parts; the Board of Governors in Washington; the 12 Federal Reserve Banks, their branches and other facilities situated throughout the country; the Federal Open Market Committee; the Federal Advisory Council; and the member commercial banks, which include all national banks and State-chartered banks that have voluntarily joined the System.

That's the definition of Federal Reserve System in Black's Law Dictionary 6th Edition. Courtesy of Cekhukum.com.