United States: Currency & Financial System

The United States dollar (USD) has served as the country's official currency since the Coinage Act of 1792, which fixed it at parity with the Spanish silver dollar and divided it into 100 cents. The dollar remained linked to gold for much of its history until President Richard Nixon ended dollar-to-gold convertibility in 1971, after which it became a freely floating currency. As of 2026, the dollar remains the world's most widely used currency in international trade and the leading reserve currency held by foreign central banks, a role it assumed from the British pound sterling under the Bretton Woods Agreement.

The country's central bank, the Federal Reserve System, was established by the Federal Reserve Act of 1913 after a series of banking panics exposed the need for a more elastic currency and a lender of last resort. The Federal Reserve is organized around a Board of Governors in Washington, D.C. and twelve regional Reserve Banks located across the country; its Federal Open Market Committee sets monetary policy, including short-term interest rate targets. Beyond setting policy, the Federal Reserve supervises many banking institutions, works to maintain overall financial stability, and provides payment and other services to depository institutions and the federal government.

Bank regulation in the United States is unusually fragmented compared with most countries, which typically rely on a single regulator. Banks may be chartered at the state or federal level, a structure known as the dual banking system, and federally chartered national banks are supervised by the Office of the Comptroller of the Currency, created in 1863. Deposit insurance is handled separately by the Federal Deposit Insurance Corporation, established in 1933 after the bank failures of the Great Depression, insuring deposits up to $250,000 per depositor per bank. Securities markets fall under yet another regulatory structure, apart from bank supervision, a patchwork of agencies that is a defining feature of the U.S. financial system.