can help the public to understand the rationale behind policy decisions and to anticipate better the central bank's reaction to new information. this understanding should, in turn, enhance the effectiveness of policy and lead to improved economic outcomes. by reducing uncertainty, central bank transparency may also help anchor the public's longer - term expectations of inflation. much experience has shown that well - anchored inflation expectations tend to help stabilize inflation and promote maximum sustainable economic growth. good communication by the central bank is also vital for ensuring appropriate accountability for its policy actions, the full effects of which can be observed only after a lengthy period. a transparent policy process improves accountability by clarifying how a central bank expects to attain its policy objectives and by ensuring that policy is conducted in a manner that can be seen to be consistent with achieving those objectives. over the past decade or so, the federal reserve has significantly improved its methods of communication, but further progress is possible. as you know, the fomc last year established a subcommittee to help the full committee evaluate the next steps in this continuing process. our discussions are directed at examining all aspects of our communications and have been deliberate and thorough. these discussions are continuing, and no decisions have been reached. my colleagues and i remain firmly committed to an open and transparent monetary policy process that enhances our ability to achieve our dual objectives of stable prices and maximum sustainable employment. i will keep members of this committee apprised of developments as our deliberations move forward. i look forward to continuing to work closely with the members of this committee and your colleagues in the senate and house on the important issues pertaining to monetary policy and the other responsibilities with which the congress has charged the federal reserve. thank you. i would be happy to take questions.

meet the mandatory criteria in the framework will be under no obligation to adopt basel ii. as noted, basel ii is an extensive undertaking ; thus for a potential opt - in institution, the choice of moving to basel ii resides with the institution itself. firms should decide for their own reasons whether to attempt to qualify for basel ii at the earliest possible date, to qualify at a later date, or to remain within the existing capital framework. the agencies will continue to provide as much information as possible to assist potential opt - in institutions in making their decisions. for example, the fourth quantitative impact study, or qis - 4, and the loss data collection exercise, or ldce, should help institutions make decisions about their basel ii preparations - including the decision by non - mandatory institutions as to whether they should opt - in, and if so, when. furthermore, our supervisory teams continue to stand ready to discuss basel ii - related issues with all banking organizations and answer any questions that arise ; this includes discussing preparatory steps those institutions may be taking for basel ii. the federal banking and thrift agencies acknowledge the substantial work involved for institutions looking to adopt basel ii in the united states and are committed to ensuring that basel ii is implemented in a fair and equitable manner. as indicated, the agencies remain unequivocally committed to fulfill all procedural requirements in working toward a final framework - based rule. in addition, the agencies remain committed to offering equal information to all parties with an interest in basel ii, which of course includes proposed mandatory institutions and potential opt - in institutions. in this regard, the agencies have provided a substantial amount of public information relating to the proposed adoption of the framework - based rule - including the aforementioned release on the proposed u. s. basel ii qualification process. we have also met individually with a wide range of institutions to discuss the proposals and institutions ’ preparatory work, and have offered access to several basel ii - related activities ( such as qis - 4 and ldce exercises ) to any institution wishing to participate. let me state quite clearly that we value the participation of all institutions in these efforts and welcome the continued dialogue. u. s. regulators - especially those among us who spent the greater part of our careers as bankers - are very sensitive to the competitive implications of having two sets of rules for the banking industry. regulators recognize that basel i can be enhanced and that the basel ii standardized approach is not well suited to the needs of the vast majority of our domestic - focused community banking