The regional banks also perform a function called check clearing. Using an example as reference will make this function easier to understand. S. system to be more decentralized than other nations. One of the twelve regional Fed banks has jurisdiction over the geographical location of a bank. S. 2). The Federal Reserve officially identifies districts by number and reserve bank city. 1. The Fed is also empowered to lend banks money as a lender of last resort. This allows liquidity to be added to the system and helps banks to maintain solvency.

He indicated that there should be limits on interest rates to prevent them from becoming excessive. John Maynard Keynes held a similar position. The key factor defining the boundaries of interest and usury is excessive or unreasonable charges. S. S. dollar, which today is the leading reserve currency in international exchanges, has a fascinating history. During the days when America was a colony of Great Britain, money was in short supply. The most common coin in circulation was the Spanish silver dollar.

Paper currency was adopted by the Second Continental Congress in The History and Evolution of Money: A Look Back 17 1775. The paper currency issued was supposed to be backed by gold and silver. While the continentals’ value was officially set at one dollar per Spanish dollar of silver, the new currency quickly devalued, trading at two continentals per silver dollar. Their value continued to decline, and by 1780, they traded at the rate of forty continentals per Spanish dollar, and dropped to seventy-five per dollar in 1781.