One of the major weaknesses of the banking system before the Federal Reserve System was set up was
A) the arrangement for holding reserves.
B) the lack of a deposit insurance system.
C) a lack of currency and coin.
D) an inadequate supply of government bonds.

Question

Quizplus · Accepted Answer

Before the Federal Reserve System was established, one of the major weaknesses of the banking system was the decentralized and inefficient arrangement for holding reserves. Banks often kept their reserves in various reserve cities, leading to liquidity issues and making it difficult to respond effectively to bank runs and financial crises.

One of the Major Weaknesses of the Banking System Before