necessarily reflect the views of my colleagues on the federal open market committee or its staff. 1 the answer, i believe, is that more is not necessarily always better, and at each step of the way central banks have needed to take account of the potential costs as well as the benefits of greater transparency. one consideration involves the nature of information and its relationship to market pricing. in fact, economists do not fully understand how markets incorporate information. herding behavior, information cascades, multiple equilibria, and the amount of investment in financial research all pose puzzles about markets and information. the situation is complicated still more when an important participant is seen as having superior information owing to its investment in research or its understanding of its own behavior. in such circumstances, certain types of central bank talk might actually impinge on welfare - enhancing market pricing by being misunderstood and receiving too much weight relative to private judgments. we need to be particularly careful that people understand how limited our knowledge actually is - the uncertainty and conditionality around any statement we make about future developments. moreover, what we are doing is complicated and involves weighing many factors ; we should not misrepresent it for the sake of clarity in communication. the publication of useful information is complicated further by the fact that, in most countries, policy is made by a committee ; representing the thinking of a diverse group is difficult and limits what can be said. vincent r. reinhart, of the board ’ s staff, provided valuable advice and comments in the preparation of these remarks. a second type of consideration that has constrained the pace of increase in transparency is its potential interaction with monetary policy decisions. what we say is important, but what we do over time will ultimately determine economic outcomes. we should not allow a desire for clarity of expression to deflect our decisions from those that would contribute best to overall economic performance and which may be difficult to explain easily. and we must take care that policy expectations engendered by communication do not unduly constrain policy action. furthermore, we cannot allow transparency to limit discussion in the committee out of concern about how its publication will affect markets and the economy. every decision about additional transparency is a balancing of possible costs and benefits. the preexisting structure of central bank talk reached its state for particular reasons ; changing it entails adjusting the balance that previous committees found. and reversing movements toward greater communication in the event of unforeseen consequences could be difficult. but circumstances change ; markets

interpreted as pertaining to the most recent decision, not the one at the preceding meeting for which the minutes were prepared. finally, the difficulty of structuring talk about the future in the brief announcement released immediately after the meeting has enhanced the perceived value of the minutes for this purpose. expedited release is an incremental step. the market will not have information it did not eventually have before, but it will have it sooner. conclusion over the past several decades, central banks have become considerably more open about their decisions and the reasons for them. progress has been incremental - and may have seemed slow to some - but we have been adapting to changing circumstances in financial markets and in the governance of central banks in democratic societies. in addition, we have tried to be careful not to allow steps toward greater transparency to impinge on discussions or deflect us from making the best possible decisions to reach our objectives. finally, we have been conscious of the limits of our knowledge and desirous of allowing other views to be incorporated in asset prices. we have done a lot, but i am sure more can be accomplished and the committee will look carefully at proposals as they are brought forward. over time, i anticipate further steps toward explaining our views, but at a pace that is likely to be measured.