that with more well - informed and financially astute consumers making better financial decisions, competition is promoted among the financial service providers. moreover, market efficiency would improve with the creation of new products and services that are more responsive to the requirements of consumers. in relation to this, financial literacy has become a vital skill in this increasingly more complex financial world, characterised by increasingly sophisticated financial products and services and growing diversity in financial service providers and distribution channels. while the overarching objective of consumer education is to impart knowledge that will improve consumers'financial decisions, it cannot be assumed that equipping consumers with more information will automatically lead to improved financial behaviour. research has shown that consumer decisions may not always be made based on sound advice and knowledge, but are at times made on impulsive intuition. the key challenge lies in determining how behavioural factors and other factors such as socio - economic and cultural backgrounds, life events and skill levels influence rational decision - making. the wide variation in information needs that arise from differences in prior experience, language and cultural background, current financial situation, and competing demands for consumers'time all pose challenges in the development and delivery of relevant information to consumers. in particular, the most effective means of engaging consumers that have a low level of interest in financial planning needs to be determined. in relation to this, financial service providers need to provide consumers with information that accurately represents the features, risks and returns associated with their products and services and demonstrate integrity and good faith by offering products and services that are appropriate to the customers'financial needs and circumstances. the issue is how a consistent and comprehensive disclosure regime could be established, with the flexibility to apply differentiated rules in response to different situations and circumstances. finally, disclosure as a consumer protection tool will only serve its purpose if consumers are able to understand the information provided. the challenge is to get the right balance between providing sufficient information to consumers to make informed choices, with the information being clear, concise and effective. the increase in the number of delivery channels has not resulted in an equitable expansion in the access to financial services. even in developed countries, there remains minorities that have limited access to basic financial services. for instance, a study conducted in the united kingdom for the period 2002 - 2003 found that 2. 8 million adults in households had no access to a bank account. in relation to this, regulators have to balance between the need for financial institutions to operate efficiently and the need to ensure access to basic financial services for both individuals and small

for banks to establish good risk management policies addressing the issues i have just discussed, so that strong risk discipline is codified. concluding thoughts of course, it is not just the banking industry, but also those of us in the public sector who have some key lessons to learn. banks and supervisors alike need to undertake additional work to facilitate the building of robust methods of quality assurance in the financial markets that will help to restore and maintain confidence. ensuring that banks exercise good risk management, of course, is an important job for bank supervisors, which includes overseeing their ability to properly capture the risks in the markets in which they operate, as well as their ability to conduct appropriate stress testing to explore potential consequences of different types of market distress. doing so requires that supervisors themselves develop a strong understanding of the value, limits, and potential harms associated with banks'attempts to protect their exposures. at the federal reserve, we have already begun to enhance our supervisory work in this area and are communicating expectations to banks. at the international level, we are working with our colleagues in other countries and within international bodies, such as the basel committee on banking supervision – which is meeting later this week – and the financial stability forum, to investigate whether other practices could be adopted around the world to mitigate the challenges i have outlined above. this work will be a major focus during the next few months and over the course of 2009. randall s. kroszner, 2008, " improving the infrastructure for non - agency mortgage - backed securities, " speech delivered at the federal reserve system conference on housing and mortgage markets, washington, d. c., december 4.