Congress gave the Federal Reserve the power to ____ the banking system and _____ certain types of financial institutions.

Expert Answers
stolperia eNotes educator| Certified Educator

One way of completing this sentence would be to say "Congress gave the Federal Reserve the power to regulate the banking system and support certain types of financial institutions."

The Federal Reserve System is made up of twelve Federal Reserve Banks, distributed throughout the country. The Federal Reserve System regulates the amount of currency in circulation and ensures that banks are keeping adequate funds in reserve. These actions serve to reassure bank customers that their funds are protected, available, and worth their stated value.

Federal Reserve banks support other banks located within their districts by distributing currency, selling government-issued bonds, and making loans to individual banks. These services allow local banks to carry out day-to-day transactions for their individual and business customers.