What significant act was passed in 1913 related to the banking system in the United States?

The Federal Reserve Act, passed in 1913, established the Federal Reserve System, which serves as the central banking system of the United States. This act was significant because it aimed to provide a safer, more flexible, and more stable monetary and financial system. Prior to its enactment, the U.S. banking system was characterized by instability and frequent financial panics, which adversely affected the economy. The Federal Reserve Act created a framework for regulating and supervising banks, managing inflation and interest rates, and providing a mechanism for banks to borrow in times of need.

The establishment of the Federal Reserve was pivotal during times of economic distress, allowing the central bank to implement monetary policy effectively and maintain economic stability. The Federal Reserve's role in controlling the supply of money and serving as a lender of last resort has fundamentally shaped the U.S. economy and banking practices in the years following its creation.