ben s bernanke : ceremonial swearing - in remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the ceremonial swearing - in by president bush, federal reserve board of governors, washington, dc, 6 february 2006. * * * good morning. i would like to begin by thanking president bush for the confidence he has placed in me and for attending this ceremony. today marks only the third visit of a president to the federal reserve. franklin d. roosevelt dedicated this building in 1937 and gerald r. ford visited in 1975. mr. president, you do us a great honor. members of the president's economic team and the heads of the federal financial regulatory agencies have also joined us this morning. i have greatly enjoyed collaborating with many of you during my time in washington, and i look forward to working with you in the future. thank you for coming. i would like to extend a special welcome to members of congress. the federal reserve was created by congress in 1913 and entrusted with the power, granted originally to the congress by the u. s. constitution, to coin money and regulate the value thereof. accordingly, it is incumbent on the federal reserve to report regularly to, and work closely with, the congress. i look forward to a strong and constructive relationship with members of both the house and senate. former chairmen paul volcker and alan greenspan also honor us with their attendance. their leadership and insight have contributed immeasurably to the strength and stability of our economy. the nation and the world owe a debt of gratitude to these two great americans. that these distinguished guests have chosen to join us today is a testament to the centrality of this institution to the nation's economic life. our mission, as set forth by the congress, is a critical one : to preserve price stability, to foster maximum sustainable growth in output and employment, and to promote a stable and efficient financial system that serves all americans well and fairly. in his remarks in this building in 1937, president roosevelt described as our purpose " to gain for all of our people the greatest attainable measure of economic well - being, the largest degree of economic security and stability. " as i contemplate taking up the challenge of leading an institution with such weighty responsibilities, i count, first, on the love and support of my family : my wife anna, son joel, and daughter alyssa, who are here today. i know also that i

subdued and the economic return on higher education has increased - in particular in technical education. in addition, wage formation has been improved, which should have been facilitated by the monetary policy focus on price stability. at the same time, the pressure on companies to use resources efficiently has increased during the 1990s. tougher competitive pressure as a result of both increased internationalisation and deregulation in a number of sectors has increased the need for companies to economise with scant resources. less wastefulness with resources means that labour force and capital are employed in other areas, where they can better contribute to the national economy. the development of investment is another factor that may have contributed, even if capital intensity has increased at a very slow rate. one factor that has not contributed to a long - term improvement in resource allocation is the development of the exchange rate. the devaluations in the 1970s and 1980s have been followed by a floating exchange rate, but with an undervalued swedish krona. the longer the krona remains these calculations are based on a cobb - douglas production function with a constant returns to scale. undervalued, the greater the risk of bad investments being made in domestic businesses. i do not intend to go into these issues in greater detail here and now, but would nevertheless like to point out that undesirable effects on business can arise through a misaligned currency giving flawed relative prices. companies may make decisions regarding investment and employment on the basis of these relative prices. the foremost risk here is that too many resources will be drawn to the export sector and to the import competition sector before there is a return to the equilibrium exchange rate and to corresponding relative prices. at that point, the resources overinvested in these sectors will be transferred to other sectors. we know from previous structural changes in, for instance, shipping, steel manufacture and the property sector, that such a development would result in considerable costs to the real economy. one should not underestimate the importance for welfare of a correctly valued swedish krona. openness is important factor productivity is also affected by a country's capacity to utilise technological progress in the outside world. this capacity in turn depends on how open the country is to impulses from outside, which is determined by the barriers that exist to ideas, goods, services and production factors moving freely across the borders. a number of studies have shown that countries, which are more open have a greater capacity to imitate technological progress.