To understand the purpose and role of the Federal Reserve system, we must first understand the origin of the central bank of the United States. President Woodrow Wilson signed the Federal Reserve Act on December 23, 1913. The primary purpose of the act was to ensure that a supply of money and credit was available in the United States to meet banking demands by establishing Federal Reserve banks that would have the responsibility to support the credit structure during times of financial stress. More banks were expected to rely on the Federal Reserve for emergency cash and credit. Government and bank influence would select management, primarily a board of directors chosen by the banks. Oversight would be carried out by the Federal Reserve Board. The intent in 1913 was to create eight to twelve centrally located district Federal Reserve banks, and the national banks would be required to maintain a portion of their reserves at the Federal Reserve. The Federal Reserve would receive deposits from the government and would only receive deposits and lend to member banks. It took nearly a year to determine the boundaries of the twelve decided districts and establish the twelve Reserve Banks (one of the four components of the Federal Reserve). Named after the city in which they are located, the twelve banks are Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Federal Reserve plays a significant role in maintaining the stability and liquidity (the ability to turn an asset into money) of the financial system, working towards low and stable inflation and also striving to encourage growth in production and employment . A second component, the Federal Reserve Board...... half of the document ......y 10). Retrieved May 23, 2012, from the Board of Governors of the Federal Reserve System: http://www.federalreserve.gov/newsevents/press/other/20110110a.htmPress release. (2012, January 11). Retrieved May 23, 2012, from the Board of Governors of the Federal Reserve System: http://www.federalreserve.gov/newsevents/press/other/20120110a.htm(1914). The Federal Reserve Act of 1913. In O. Sprague, The Quarterly Journal of Economics, vol. 28 n. 2 (pp. 213-254). Oxford University Press.The budget impact and subsidy costs of Federal Reserve actions during the financial crisis. (n.d.). Retrieved May 21, 2012, from CBO: http://www.cbo.gov/publication/21491Who are the members of the Federal Reserve Board and how are they selected? (n.d.). Retrieved May 21, 2012, from the Board of Governors of the Federal Reserve System: http://www.federalreserve.gov/faqs/about_12591.htm