“The Fed’s own origins are evidence for this point. It is usually argued that the Fed was created to avoid the banking crises that plagued the United States in the late 19th century. That is true to an extent. What it misses is that those crises were the product of the regulations of the National Banking System, such as the limits on branch banking and the kinds of assets banks could hold to back their issues of currency, which had the effect of making it difficult for banks to expand the money supply when the demand for currency rose due to harvest season needs or because customers wished to leave troubled banks.” Read more.
Via the Cato Institute.