There is not only the need for an alternative to the Federal Reserve, there is the strong potential for an alternative.
The year 2013 will mark the one hundred year anniversary of the formation of the Federal Reserve. For about the same amount of time, this institution has garnered controversy from how it was planned out to how it operates on a daily basis. The major characteristics of the Federal Reserve is that it is a private banking system, it releases the national currency into circulation through loans, and it lends money directly to the government through bonds. Its internal method of banking is fractional reserve banking, where a percentage of reserves held by each bank in the Fed hierarchy is the amount that is generated out of thin air for loans to the lower banks or to individuals at the bottom, and when those loans are paid back to the private banks it increases the reserve and therefore the amount of fiat currency that can be generated. Fiat currency by definition is not taken from the physical supply of the reserve that is held but is loaned out separately, in this day and age electronically as a transfer of numbers from one account to another. The percentage of the reserve determines the amount but not its source. All four aspects of the Federal Reserve such as its private status, its fractional reserve banking, its putting money into circulation through loans, and its lending to the government are all subject to criticism. The least controversial aspect of the Federal Reserve is its ability to set interest rates, which is a minor component compared to its major actions and duties. All that can be criticized can be replaced with other methods in order to have a far more just and stable banking system, one that is responsible to all citizens rather than a banking elite in partnership with a political elite.