UPDATE 1-Bernanke-Fed must be more open, guard independence

WASHINGTON, Feb 3 (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke on Wednesday said the Fed must be more transparent to the public but must also guard its independence, which serves a vital public interest.

'In the interest of maintaining public confidence and promoting economic and financial stability, we must continue to protect our independence,' he said in remarks at a ceremonial swearing in ceremony at the start of his second four-year term as Fed chairman.

Bernanke faced the stiffest opposition of any nominee in the more than 30 years the Senate has been voting on heads of the central bank. While widely credited for steering the economy through its worst upheaval since the Great Depression, Bernanke endured scathing criticism from lawmakers for his role in easy money and hands-off regulatory policies that many believe set the stage for the crisis.

Bernanke acknowledged that the turmoil revealed regulatory gaps at the Fed and elsewhere. The Fed faces 'enormous challenges,' and must persuade the public of the integrity of all of its operations, he said.

'The Federal Reserve is already one of the most transparent and accountable central banks in the world,' he said. 'We should be prepared to do even more, to become even more transparent.'

(Reporting by Mark Felsenthal; Editing by Theodore d'Afflisio)

(([e-mail]; [phone]; Reuters Messaging: [e-mail])) Keywords: USA FED/BERNANKE (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.