of financial markets. globally active banks manage their positions on an integrated basis around the world, and pressures originating in one market are quickly transmitted elsewhere. central banks should consider how to adapt their facilities to help these institutions mobilize their global liquidity in stressed market conditions and apply it to where it is most needed. that approach will require the consideration of arrangements with sound institutions in which central banks would accept foreign collateral denominated in foreign currencies. those arrangements are under active study and a number of issues need to be resolved. it is possible that over time, major central banks could perhaps agree to accept a common pool of very safe collateral, facilitating the liquidity management of global banks. the stipulation that the institutions be sound is important : decisions about lending to troubled banks should be made by home country authorities with knowledge and responsibility. another instrument of liquidity provision that central banks are examining is currency swaps to facilitate granting liquidity in other currencies. the central banks found currency swaps useful because the impediments to intermediation in money markets naturally extended to transactions across currencies as well as across maturities and counterparties. supplying credit in dollars to banks in the euro area and switzerland helped relieve pressure on those banks and in our markets. in recent months, the fed was able to make currency swap arrangements on short notice but our reaction time could be even shorter if we keep such arrangements in place or on standby. thinking carefully about which circumstances in the future would warrant the activation of such arrangements will be a useful form of contingency planning. for the united states, of course, perhaps the most difficult and important question involves access to central bank credit facilities by u. s. broker - dealers, including the primary dealers. over the past several decades, the growing importance of broker - dealers and the increasing interconnections of these institutions with other parts of the financial marketplace have accompanied the shift to intermediation through securities markets rather than through commercial banks. financial markets in most other countries are dominated by universal banks ; in those circumstances, securities activities are carried out in organizations that have access to the discount window and other aspects of the safety net we associate with commercial banks. as i have emphasized this evening, one of the things we learned over recent months is that broker - dealers, like banks, are subject to destructive runs when markets aren't functioning well, despite the fact that their borrowing in money markets is mostly secured and their assets mostly market

constraints might make such firms hesitant to hire, if demand, production, and confidence pick up, they will find their labor forces stretched thin and will begin to add workers. however, other firms, facing difficult financial conditions and intense pressures to cut costs, seem to have found longer - lasting, efficiency - enhancing changes that allowed them to reduce their workforces ; and some less - efficient firms, no longer able to compete, closed their doors. again, improved efficiency confers great benefits in the longer term. however, to the extent that firms are able to find further cost - cutting measures as output expands, they may delay hiring. other factors will affect near - term employment growth as well. business confidence in the durability of the expansion, for example, will help determine employers'willingness to hire. the current prevalence of part - time work and short workweeks may slow job creation early in the recovery period, as employers may prefer to convert workers from part - time to full - time status and to add overtime work before turning to new hires. in addition, difficulties in obtaining credit could hinder the expansion of small and medium - sized businesses and prevent the formation of new businesses. because smaller businesses account for a significant portion of net employment gains during recoveries, limited credit could hinder job labor economists have documented these points. see, for example, david t. ellwood ( 1982 ), " teenage unemployment : permanent scars or temporary blemishes? " in richard b. freeman and david a. wise, eds., the youth labor market problem : its nature, causes, and consequences ( chicago : national bureau of economic research and university of chicago press ), pp. 349 - 90 ; and thomas a. mroz and timothy h. savage ( 2006 ), " the long - term effects of youth unemployment, " journal of human resources, vol. 41 ( spring ), pp. 259 - 93. growth. overall, a number of factors suggest that employment gains may be modest during the early stages of the expansion. the outlook for the economy and policy i return now to the outlook for the economy and policy. as i noted, i expect moderate economic growth to continue next year. final demand shows signs of strengthening, supported by the broad improvement in financial conditions. additionally, the beneficial influence of the inventory cycle on production should continue for somewhat longer. housing faces important problems, including continuing high foreclosure rates, but residential investment should become a small positive