Federal Reserve Act

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The Federal Reserve Act, also known as the Act of December 23, 1913, ch. 6, 38 Stat. 251, codified in part at Chapter 3 of title 12 of the United States Code, 12 U.S.C. § 221 et seq., is a 1913 act of Congress that created the Federal Reserve System, the central bank of the United States of America. The act was based on the reports (1909-1912) of the National Monetary Commission created by the Aldrich-Vreeland Act in 1908.

The U.S. Constitution, Article I, section 8 provides in part:

The Congress shall have Power [ . . . ]

[cl. 5] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

[cl. 6] To provide for the Punishment of counterfeiting the Securities and current Coin of the United States [ . . . . ]

Article I section 10, clause 1 of the Constitution states (in part):

No State shall [ . . . ] coin Money [ or ] make any Thing but gold and silver Coin a Tender in Payment of Debts [ . . . ]

Thus, the Constitution grants the U.S. Congress the power to coin money, and prohibits the states from doing so. The constitutionality of the Federal Reserve Act has been controversial,^{[citation needed]} perhaps in part based on an argument (1) that the activities of one or more components of the Federal Reserve System might amount to the "coining" of money, and (2) that the delegation of this "coining" responsibility to a component of the Federal Reserve System might be impermissible (see Nondelegation doctrine).

The Federal Reserve System consists of twelve Federal Reserve Banks:

All banks chartered under the National Banking Act of 1863 were made members of the Federal Reserve System, while others could join. A Board of Governors of the Federal Reserve System appointed by the President of the United States supervised the system.