The establishment of the Federal Reserve System in the United States in 1913 was largely driven by the need for a more stable and secure banking system following a series of financial panics, particularly the Panic of 1907. There was a growing recognition that the U.S. economy required a centralized financial authority to manage monetary policy, control inflation, and provide a safety net for banks. The Federal Reserve Act created a decentralized central banking system with regional Federal Reserve Banks, aimed at promoting stability and providing flexible monetary regulation, which has played a crucial role in the U.S. economy ever since.