The aim of the conference is to foster the discussion about the interaction between the financial sector and the real economy and their implications for the conduct of monetary policy and financial regulation. The recent financial crisis has stimulated both theoretical and empirical research on the propagation mechanisms underlying the business cycles, in particular the role of financial frictions. Many issues concerning the interactions between banking and monetary policy forced policy designers to redefine economic policies, and motivated macroeconomists to understand the implications of financial intermediation constraints on asset price fluctuations, the behavior of non-financial firms, households, governments and in turn on real macroeconomic performance.  This conference will showcase innovative research on the role of financial intermediaries and financial frictions in the transmission of monetary policy and how to design both the new banking regulatory and supervisory structures and monetary policy in order to stabilize the economy.