Definition of: Federal Reserve System

A banking system created by the Federal Reserve Act (1913) and controlled by a Federal Reserve Board of eight members, established to provide an elastic currency and to concentrate the national banking resources in a system of twelve Federal reserve banks, each designed to regulate and aid the member banks in its respective Federal reserve district. The Federal reserve cities are Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.