U.S. monetary system

The U.S. monetary system is the framework through which the country manages its money supply and interest rates to support economic stability. At its core is the Federal Reserve, the central bank, which regulates banks, lends money, and sets interest rates. Money includes physical currency and digital balances in banks. The system influences inflation, employment, and economic growth. When the economy is slow, the Fed might lower interest rates to encourage borrowing and spending. Conversely, to control inflation, it may raise rates, affecting how much money circulates in the economy.