Final answer:
The bank failures of 1907 prompted the creation of the Federal Reserve System in 1913 to manage the money supply and control monetary policy for economic stability.
Explanation:
The bank failures of 1907 and the resulting cash shortage problems led to the creation of the Federal Reserve System. The Federal Reserve Act was passed by Congress in 1913, establishing the Federal Reserve as the central bank of the United States, with the purpose of managing the money supply and influencing monetary policy to promote economic stability.
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