Bernanke sees tentative signs economy stabilizing

In the meantime, Bernanke said the Fed was exploring an expansion of the types of credit made available through its program to restart securitization markets, the Term Asset-Backed Securities Lending Facility, or TALF.

Bernanke did not specify what areas were under consideration, but authorities have said the program may expand to include commercial mortgage-backed securities and older securities, rather than only recently issued ones.

Response to TALF so far has been lukewarm. While the central bank had allotted $200 billion in loans, only about $6.4 billion in deals have emerged in two auctions thus far.

Bernanke took pains to justify actions taken to save insurance giant American International Group (AIG.N), which has been embroiled in a controversy over lavish bonuses paid after the firm had already received $180 billion in taxpayer aid.

He argued that the firm's collapse would have compromised the entire global financial system.

Nonetheless, he argued that direct support to financial institutions and loans to investors would not compromise the taxpayer, or lead to the threat of inflation.

"I can assure you that monetary policy-makers are fully committed to acting as needed to withdraw on a timely basis the extraordinary support now being provided to the economy, and we are confident in our ability to do so," Bernanke said.

He also said the U.S. dollar remains the main currency of reserve holding and international transactions.

"The dollar remains the dominant currency in terms of reserve holdings and in terms of international transactions. That situation has not changed and I really don't see any prospects of it changing in the foreseeable future," Bernanke said in response to a question.