The Federal Reserve was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law. This act established the Federal Reserve System as the central banking system of the United States, aiming to provide a more stable and flexible monetary and financial system. The creation followed financial panics, notably the panic of 1907, which exposed weaknesses in the previous banking system and the need for a central bank to manage currency and liquidity during crises.