The establishment of the Federal Reserve Banking System in the United States in 1913 was primarily a response to the financial panics and instability in the banking sector during the late 19th and early 20th centuries. The Panic of 1907 was particularly instrumental, highlighting the need for a central bank to manage currency supply and stabilize the economy. Prior to the Federal Reserve, the U.S. experienced bank runs and credit crises that threatened financial stability. The Federal Reserve was designed to provide a safety net, facilitate the administration of monetary policy, and serve as a lender of last resort, ultimately aiming to prevent future economic crises.