When you or I need more money, we use something as collateral and go to a bank for a loan. When a country needs more money it has to go somewhere also. But in 1913 there wasn’t anywhere to go. So the US created the Federal Reserve Act. This established a private central bank (The Federal Reserve Bank) that would regulate the amount of money the US government was allowed to borrow and put in circulation. It also would expect to be repaid, like any bank, with interest.