Its own banking structure appeared in the United States during the struggle for independence, i.e. at the end of the 18th century. To understand the present state of the US banking system, you need to understand at least a little about its past. This system was not built in the same way as in many other countries, and the mechanisms that created it are still in effect.
First bank
From 1781 to 1783, the Bank of North America operated, which was both a commercial bank and the main bank of the country with a state share of 60%. He printed paper money and kept the money of the American Congress. But in 1783, the bank’s status was downgraded to an ordinary commercial institution. The state sold its stake in the bank.
The next US central bank was called the First Bank of the United States and existed from 1791 to 1811. It was the central bank of the state with all the rights and capabilities of a bank of this level, incl. with the right to issue national currency. The first bank, like many other central banks of the states of that time, was private, but with a state share of 20%.
A system without a central bank
In 1811, the license was not renewed for the First Bank due to contradictions between representatives of the authorities. Then, in different states, their own banks appeared, which, like local authorities, did not want to share freedom and income with the central government. This continued until 1816.
Second bank
From 1816 to 1833, The Second Bank of the United States acted as the central bank. One of the reasons for its opening was problems with the exchange of banknotes for coins in commercial banks. The second bank also had 20% of government funds. He also issued dollars.
However, in 1818-19, the US economy experienced a recession, which was reflected in the position of the Second Bank. In 1819, a conflict broke out again between the President, who wanted to close the Bank, and Congress, which supported the Bank’s leadership. As a result, the Second Bank of the United States also became a lower tier bank. Then the president withdrew state funds from the Bank.
The era of free banks
From 1837 to 1862, the United States dispensed with a central bank. There was no single regulator of the banking system. State banks issued money and financed government spending.