The Federal Reserve was created in 1913 in response to recurring banking panics in the United States. Its mission has since expanded into fostering a healthy economy. The Federal Reserve consists of three parts: (1) the Board of Governors; (2) Reserve Banks; and (3) the Federal Open Market Committee (FOMC). The Board of Governors is the federal government agency that regulates banks, contributes to the nation's monetary policy, and oversees the activities of Federal Reserve Banks. Reserve banks conduct research on the economy, supervise banks in their regions, and provide financial services to banks and the U.S. government. The FOMC manages the nation's monetary supply to help the economy achieve sustainable growth. The Federal Reserve maintains a regional structure of 12 banks around the country, writes regulations, and supervises banks to ensure that the banking system is safe, sound, and able to respond to a financial crisis. This illustrated booklet explains the work of the Federal Reserve. The booklet concludes with a brief summary and 10 questions for students to answer for understanding the Federal Reserve System. (BT)