The Federal Reserve (sometimes called "The Fed") is the American central bank in Washington, D.C.It was founded in 1913. It lends money to other, smaller banks. The Federal Reserve Board is a group of financial leaders who work for the Federal Reserve and decide how much to charge these banks for borrowing money (this charge is called an "interest rate"). The Federal Reserve interest rate is decided by the Federal Reserve Board after studying the condition of the U.S. economy.