As his term nears its end, Bernanke lauds Fed transparency

Nov 13 (Reuters) - The more steps the Federal Reserve takes to openly explain its policy decisions to the public the more legitimate and effective the U.S. central bank will be, Fed Chairman Ben Bernanke said on Wednesday.

Bernanke, who is set to step down from the Fed at the end of January, did not comment specifically on monetary policy or the state of the U.S. economy.

At a Teacher Town Hall Meeting on the 100-year history of the Fed, Bernanke said that until the 1990s policymakers were reluctant to publicly explain their decisions in part because they thought doing so would diminish the effectiveness of policies.

But "a more open Fed ... is both a more effective and more democratically legitimate institution," Bernanke said in remarks prepared for delivery at the event.

"The complex challenges we face as a nation are best addressed in an environment of informed public discourse, which is only possible when policy decisions are made in as transparent a way as possible."

The Fed, which was created in 1913, only started publishing policy statements in the 1990s. Bernanke, who took the helm in 2006, when George W. Bush was president, also began holding press conferences after some policy meetings to better communicate the Fed's decisions.

Steps toward transparency include the Fed's setting of a formal 2 percent inflation target early last year, and the growing number of public speeches given by other Fed policymakers - though the sometimes conflicting views theyexpress on complex topics have drawn criticism for confusing investors.

"Increasing the Fed's transparency, openness and accountability has been one of my top priorities as chairman," Bernanke said.

Janet Yellen, the Fed's vice chair and President Barack Obama's nominee to succeed Bernanke, is expected to discuss the way the Fed communicates its policy intentions at a Senate Banking Committee confirmation hearing on Thursday.