aimed at addressing financial system vulnerabilities has therefore become very important, as highlighted during the ongoing financial market correction. against this background, the major collective effort undertaken by both the public and the private sector to cope with the financial market turbulences has been encouraging. hard work has been done in terms of restoring the orderly functioning of financial markets in the short term and identifying proper measures to strengthen the resilience of the financial system in the longer term in order to avoid the recurrence of similar events in the future. the report of the financial stability forum ( fsf ) on “ enhancing market and institutional resilience ” 3 has been fully endorsed by the international community and provides the main reference point for the necessary improvements. in this context, let me briefly point out that enhancements will be required in a number of areas, with particular focus on ( i ) aspects of the prudential framework, relating to capital and liquidity risk as well as to banks ’ liquidity risk management practices ; ( ii ) transparency, including full disclosure of banks ’ exposures on structured products and off - balance sheet vehicles ; ( iii ) valuation standards, especially as regards marking - to - market illiquid assets ; ( iv ) market functioning, including possible conflicts of interest of credit rating agencies and their role in rating structured finance instruments ; and ( v ) authorities ’ responsiveness to risks and arrangements for crisis management. at the present juncture, the key priority is to ensure the expeditious and effective implementation of the respective recommendations set out in the fsf report. there is a strong consensus among the international community to act with determination in this regard. in addition, it is fortunate that many of the recommendations were developed by the authorities that now have the mandate to apply them. nevertheless, the competent national, the report was published on 11 april 2008. it is available at http : / / www. fsforum. org / home / home. html. regional and international authorities and bodies will need to make every possible effort to ensure adequate progress. this relates especially to those actions which were agreed to be implemented within 100 days or by the end of this year. in addition, it will be crucial to continuously monitor the progress made in order to keep up the momentum for reform and, possibly, to identify elements that may require further follow - up action. the fsf will play an instrumental role in monitoring the efficacy of the implementation of its recommendations. i would like to point out that some

. economy was able to simultaneously experience rapid growth, low unemployment, and low inflation in the late 1990s. 9 see krueger, mitman, and perri ( 2016 ). 10 on the role of financing constraints for firm employment, see siemer ( 2014 ) ; chodorow - reich ( 2014 ) ; and duygan - bump, levkov, and montoriol - garriga ( 2015 ). a general - equilibrium model with heterogeneity among firms and credit frictions is studied in khan and thomas ( 2013 ). for the role of entry and exit in macroeconomic dynamics, see clementi and palazzo ( 2016 ) as well as gourio, messer, and siemer ( 2016 ). 11 for early quantitative work on the relationship between income and wealth heterogeneity and the macroeconomy, see krusell and smith ( 1998 ). 12 guvenen ( 2011 ) reviews several issues related to macroeconomics with heterogeneity. for an overview of the interactions between distribution and aggregate outcomes, see the work by quadrini and rios - rull ( 2015 ). for recent work on the effects of monetary policy in models with heterogeneous agents, see kaplan, moll, and violante ( 2016 ) ; gornemann, kuester, and nakajima ( 2016 ) ; auclert ( 2016 ) ; and sterk and tenreyro ( 2016 ). 13 for an example of early research on this topic, see bernanke and gertler ( 1989 ). other important pre - crisis studies include the development of the financial accelerator model by bernanke and others ( 1999a ) and work by kashyap and stein ( 2000 ) and peek, rosengren, and tootell ( 2003 ) on the bank balance sheet channel and the effects of bank loan supply shocks. for a more recent summary of the role of banks in the monetary transmission mechanism, see peek and rosengren ( 2013 ). chaney, sraer, and thesmer ( 2012 ) provide evidence for the collateral channel of real estate for corporate investment, while mian, rao, and sufi examine the influence of household balance sheets on consumption. 14 more empirical work would be useful to disentangle the spending effects that result from changes in credit 10 / 12 bis central bankers'speeches conditions from those that result from movements in interest rates, as estimates of the latter likely often