federalreserve. gov / boarddocs / speeches / 2007 / 20070523. a leveraged loan is commonly defined as a syndicated loan, typically to a riskier borrower, with an interest rate of at least libor plus 125 basis points. through securitization, while holding only nominal exposures themselves. although defaults and other indicators of borrower distress still remain low, and banks ’ exposures are so far quite manageable, supervisors are mindful that high levels of leverage can lead to credit problems relatively quickly for both borrowers and lenders when conditions turn. we want to ensure that any adverse events do not materially affect the banking industry and hope to encourage market participants to employ morerealistic expectations and structures in underwriting riskier corporate loans. turning to inflation risks, the high level of resource utilization continues to have the potential to put additional upward pressure on inflation. and, of course, higher oil prices and the possibility of further increases also pose an upside risk to inflation. with these concerns in mind, the latest statement issued by the federal open market committee again highlighted the risk that inflation could fail to moderate as expected, and i believe that the risks to the inflation outlook are primarily to the upside. the statement also noted that future policy adjustments will depend on the evolution of the outlook for inflation and economic growth, as implied by incoming information. i will continue to monitor these developments, as well as those in financial markets, very closely. this bis review is available on the bis website at www. bis. org.

ben s bernanke : the importance of financial education welcoming remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the greater washington jump $ tart coalition financial education event, washington dc, 25 april 2007. * * * good morning. i am pleased to be able to be here today, at the greater washington jump $ tart coalition's inaugural event, to celebrate financial literacy month 2007 and to say a few words about the importance of financial education. i join other jump $ tart partners as well as professionals from the fields of banking, finance, government, and law who will be speaking to nearly 2, 000 public high school students about financial literacy. it is a special privilege to be with the students here today, the juniors and seniors of washington's own woodrow wilson high school. you are ambassadors of your school and indeed of washington, our nation's capital. i know that this is a school committed to academic excellence. as you think about the time, not so far away now, when you will leave wilson high, i hope that you will resolve to keep, throughout your life, the habits of learning and of thinking for yourself that you have gained in your years here. as you think about your future, don't forget the importance of financial literacy. although financial matters are probably not at the front of your minds today, the day will come when you will be responsible for managing your own or your family's budget or when you will find that you need to save to get the things you want – a college education, a new car, or even your own home. to achieve these personal goals and to build financial security, you will need to understand the fundamentals of budgeting, banking, saving, and investment. it is also essential that you know how to use – properly and responsibly – the many types of credit that will be at your disposal, such as credit cards. later this morning, my colleagues from the federal reserve will be talking with you about how to manage your credit. because credit has become such an integral part of our economy, and because there are so many sources and forms of credit available, much more financial sophistication is required today than when i attended high school. as a parent of two young adults myself, i believe that helping young people become financially literate is critical for their future economic well - being and should be a high priority for educators. in