the market. competition will also tend to result in the failure of unproductive businesses and facilitate the entry and success of more innovative ones. in addition, more heavily - regulated firms may be less motivated to choose an efficient technology. in recent years, industries such as telecommunications, transportation, electricity and banking have undergone privatization, deregulation and increased competition in a number of countries. in many cases, these reforms were in fact prompted by technological change which reduced large fixed costs and thus the scope for natural monopolies. furthermore, in some of these industries, there is evidence that the move towards a more liberalized regulatory regime induced further innovation. a good example is the telecommunications industry. evidence on patents ( one measure of innovation ) and measures of productivity suggests that those countries that have extensively liberalized ( such as japan, the united kingdom, finland and the united states ) have experienced greater innovation and larger gains in efficiency. evidence from the telecommunications industry also suggests that the technological diffusion rate is faster under a more competitive regulatory regime. for instance, both growth in cellular phone usage and the penetration rate for internet hosts is much higher in more competitive market structures. this is not to suggest that regulation is necessarily a bad thing. regulations that protect intellectual property rights reward those with creative ideas and therefore can act to stimulate cost - reducing innovations. from a broader perspective, productivity growth is obviously not society ’ s only priority – worker health and safety, pollution control and other societal values are important as well. although it has been argued that regulations requiring mandated approaches to pollution reduction or worker safety tend to divert managerial energies from pursuing cost - reducing innovations, studies have shown that some regulatory changes can in fact enhance productivity by forcing a firm to develop new and more - efficient production techniques. for example, the cotton dust standard mandated by osha is claimed to have led to the adoption of new and more cost - effective technologies utilized by the textile industry. what i think this suggests is the need, as with so much in economics, to recognize trade - offs. we should recognize the broad range of society ’ s interests and continue to seek balance by striving for regulation that serves well - defined purposes with minimal burden. other institutional features other institutional features are also important to the climate for innovation. for instance, entrepreneurship is fostered by access of small firms to capital markets. a lack of breadth and depth of financial institutions and markets can inhibit the financing of innovative projects by small firms. again, the united states appears to have an

ben s bernanke : financial education and the national jump $ tart coalition survey remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the jump $ tart coalition for personal financial literacy and federal reserve board joint news conference, washington, dc, 5 april 2006. * * * good morning. we are here today to learn about a report on a topic of vital importance to our economic future : the financial literacy of america ’ s young people. increasingly, personal financial security requires the ability to understand and navigate the financial marketplace. for example, buying a home, saving for retirement or for children ’ s education, or even effectively managing the family budget now requires more financial sophistication than ever before. financially literate consumers make the financial marketplace work better, and they are better - informed citizens as well. as a former educator and school board member, and as the parent of two young adults, i am personally convinced that improving education is vital to the future of our economy and that promoting financial literacy in particular must be a high priority. i know that those of you here today join me in this conviction. the jump $ tart coalition is a leader among organizations seeking to improve the personal financial literacy of students from kindergarten to the university level. in particular, through its biennial survey of high school seniors - - the results of which you will hear about in a few minutes - - jump $ tart has brought increased attention to the issue of financial literacy among youth in the united states. over the tenyear history of this survey, the data gathered have become some of the most useful measures of what young adults understand about finances. the federal reserve is strongly committed to jump $ tart ’ s mission to better educate america ’ s youth about personal finance. on the regional level, many federal reserve bank staff members work closely with the state coalitions to help achieve this mission. in fact, there is at least one specialist in economic education at each of the reserve banks and at most of the branches. many of these specialists offer training seminars to help educators teach economics and personal finance in their classrooms. the federal reserve also supports a variety of programs and initiatives to increase financial literacy. i want to take a moment to describe just two of these initiatives. the first is a student competition called the fed challenge, a program designed to teach students about monetary policy and the national economy. among other activities, students in this competition take the roles of federal reserve