U.S. Fed Chairman Bernanke said in a speech given here on Tuesday that fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system.

He said that the Fed will do its part to promote economic recovery, but other policy measures will be needed as well. The incoming Administration and the Congress are currently discussing a substantial fiscal package that, if enacted, could provide a significant boost to economic activity.

　　U.S. Federal Reserve Bank Chairman Ben Bernanke delivers a speech at the London School of Economics in central London January 13, 2009.

History demonstrates conclusively that a modern economy cannot grow if its financial system is not operating effectively, he added.

"Should the Treasury decide to supplement injections of capital by removing troubled assets from institutions' balance sheets, as was initially proposed for the U.S. financial rescue plan, several approaches might be considered", he said.

　　U.S. Federal Reserve Bank Chairman Ben Bernanke listens to questions after delivering his speech at the London School of Economics in central London January 13, 2009.

According to Bernanke, regulatory oversight should be coordinated internationally to the greatest extent possible and the work of strengthening the financial infrastructure should be continued. In addition, the supervisory authorities should develop the capacity for increased surveillance of the financial system as a whole, rather than focusing excessively on the condition of individual firms in isolation.

"We must take care not to take actions that forfeit the economic benefits of financial innovation and market discipline," he emphasized.