about financial stability, fiscal space and central bank independence. and, looking ahead, new financial technologies could affect the implementation and transmission of monetary policy. so, we are most fortunate to have with us today a very distinguished group of speakers to enlighten us with their thinking on these and other challenging issues. please let me close by thanking them, and all conference participants, especially those who have come some distance to be with us today. it promises to be a very stimulating workshop, and my colleagues and i are very much looking forward to listening and discussing with you. bonne journee. 2 / 2 bis central bankers'speeches

a share of sector output continued to climb and reached almost 11 percent in the third quarter of last year. this share lies above its long - run average over the past few decades and well above the cyclical trough of 7 percent in 2001. to be sure, the profit share likely will slip a bit from its high level as the expansion gains steam and businesses hire new workers more aggressively. but some decline in the profit share is to be expected and will not, in my view, significantly impair the financial health of companies. this favorable view is reflected in risk spreads on corporate bonds, which have dropped dramatically from their historic highs in the fall of 2002. and firms that have turned to capital markets for financing have found them to be accommodative. a remaining financial hurdle for some companies is the underfunding of defined benefit retirement plans, though this burden is notably less than it was two years ago. at the end of 2002, the majority of s & p 500 plans were underfunded, with a net shortfall that had grown to more than $ 200 billion, as stock market losses from 2000 - 02 eroded the value of assets and declining interest rates raised the current value of plan liabilities. since then, companies have made large cash contributions to shore up these plans and equity prices have risen, reducing the aggregate underfunding for s & p 500 companies to around $ 125 billion at the end of 2004. in addition, plan sponsors received some temporary relief from federal legislation passed early last year that allowed firms to use a discount rate for their liabilities based on corporate bond yields rather than one based on treasury yields. the replacement effectively reduced the stated value of liabilities and thus estimates of underfunding and required cash payments for tax purposes. nonetheless, important longer - term issues regarding defined benefit plans remain. in decades past, workers might spend most or all of their careers at a single firm and might receive generous preset benefits from traditional defined benefit plans, with a guaranteed benefit to be provided by the pension benefit guaranty corporation ( pbgc ), the government entity that insures defined benefit plans, if the firm were to go bankrupt. as workers began to change jobs more frequently, however, they increased their demand for defined contribution retirement plans because of their portability and the more - even pattern of benefit accruals over a worker ’ s career. also, many companies were attracted to these plans as a way to limit their future funding obligations for traditional defined benefit retirement