614 PART TEN MONEY AND PRICES IN THE LONG RUN banks around the world include the Bank of England, the Bank of Japan, and the European Central Bank. THE FED’S ORGANIZATION The Federal Reserve was created in 1914, after a series of bank failures in 1907 con-vinced Congress that the United States needed a central bank to ensure the health of the nation’s banking system. Today, the Fed is run by its Board of Governors, which has seven members appointed by the president of the United States and confirmed by the Senate. The governors have 14-year terms. Just as federal judges are given lifetime appointments to insulate them from politics, Fed governors are given long terms to give them independence from short-term political pressures when they formulate monetary policy. Among the seven members of the Board of Governors, the most important is the chairman. The chairman directs the Fed staff, presides over board meetings, and testifies regularly about Fed policy in front of congressional committees. The
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