... Credit and Banking, Supplement to Vol. 42, September, 2010, pp. 107-141. 3 See Curdia, V. and Woodford, M., Credit frictions and optimal monetary policy , revised draft of paper prepared for ... Intermediation and Credit Policy in Business Cycle Analysis”, in Friedman, B. and Woodford, M. (eds.), Handbook of Monetary Economics, Vol. 3, North-Holland, Amsterdam, 2010. 5 Goodfriend, M., and, McCallum, ... capital and liquidity positions and their product diversi cation.1 Nonetheless, the most direct determinants of retail bank lending and deposit rates for households and rms are policy (and...