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Banking and the Federal Reserve


bank: A place of business that lends, exchanges, takes care of, or issues money.

charter: An official document granting, guaranteeing, or showing the limits of the rights and duties of the group to which it is given.

circulation: The passage of money from person to person or place to place.

coin: A piece of metal put out by a government authority as money.

credit: An amount that a bank or company will let a person use with the promise of future repayment.

currency: Money in circulation.

debt: Something owed to another.

Federal Reserve: The current central banking system of the United States of America.

Federal Reserve Act of 1913: Written by Senator Robert L. Owen of Oklahoma and Congressman Carter Glass, the bill created the federal reserve system of twelve districts.

interest: A charge for borrowed money that is generally a percentage of the amount borrowed.

invest: To lay out money to return a profit.

loan: Money lent at interest.

profit: The gain after all the expenses are subtracted from the amount received.

regulation: A rule or order telling how something is to be done.

run: When a large number of customers withdraw their deposits from a bank at the same time because they are worried that the financial institution might go under or close and they will lose their money.

speculation: The taking of a big risk in business in hopes of making a big profit.

spoils system: A practice where a political party, after winning an election, gives government jobs to its voters as a reward for working toward victory, and as an incentive to keep working for the party.