Realizing the need for banks to obtain liquidity during periods of economic stress, the federal government wanted to establish a banking system that would have an entity that banks could borrow from. The U.S. Congress accomplished this with the passage of the ________.

Question

Quizplus · Accepted Answer

The Federal Reserve Act of 1913 established the Federal Reserve System, which includes the ability for banks to borrow from the Federal Reserve during times of economic stress. The other options may have had some impact on the banking system, but did not specifically establish an entity that banks could borrow from for liquidity.

Realizing the Need for Banks to Obtain Liquidity During Periods