sectors and across borders, and therefore to be proactive should local financial developments become threats to broader financial stability. closer financial integration will also enhance the transmission of monetary policy decisions throughout the euro area and thereby contribute to financial stability. in the medium to longterm, the banking union will support the formation of a genuinely european financial system that will foster competition and consolidation in the banking industry. adequate regulation will ensure that the associated efficiency gains can be reaped without the risk of creating too - bigto fail institutions. enhancing the macro - prudential toolkit another important dimension that the banking union introduced relates to the new macroprudential policy instruments that, for the first time, were given to the ecb / ssm. this is particularly important at a moment when we expect monetary policy stance to remain very accommodative for an extended period of time in order to attain our price stability objective. inflation became very distant from our official target since october 2013 and threatens to continue on the low side for some time to come. the environment of low nominal growth now prevailing creates serious risks to the social and economic fabric of the euro area. the ecb is responsible for price stability which is always effectively controlled by monetary policy on a medium - term basis. this is a basic tenet of monetary theory that justifies the independence of central banks. having reached the zero lower bound of our policy rates, we decided on a package of measures that include medium - term provision of liquidity conditional on banks ’ lending behaviour and two programmes of asset purchases. to explore new channels of transmission of monetary policy that have worked in other countries like the u. k. and the u. s., we are aiming to increase the size of the monetary base and our balance sheet by directly injecting money also into non - bank economic agents. we expect that within the time of the programme, the adopted measures will lead the balance sheet to return to the size it had in early 2012. we have of course, to closely monitor if the pace of its evolution is in line with that expectation. in particular, during the first quarter of next year, we will be able to better gauge if that is the case. if not, we will have to consider buying other assets, including sovereign bonds in the secondary market, the bulkier and more liquid market of securities available. it would be a pure monetary policy decision, buying according to our capital key, within our mandate and our legal competence. the transmission channels

. monetary authorities also play an important role in this process by conducting a credible policy which leads to price stability and thus creating an environment where entering into erm ii will be smooth and credible. most of the results presented here are broadly in line with the ecb ’ s view that eu enlargement has positive implications for economic growth and welfare in both the “ previous ” and “ new ” member states ; unfortunately, these benefits have often been set aside in the public debate. already the prospect of the countries joining the eu had positive implications. as trade and capital movements have been to a large extent liberalised well before accession, the degree of integration had already reached a significant level between the new and previous member states. in fact, at the eve of eu enlargement the euro area directed around 11 % of its total exports and imports to the new member states, an increase of almost 50 % in 10 years ; the 10 new member states as a group represent one of the main trading partners of the euro area, exceeding trade with japan by far ( 8 % ) and being only somewhat lower than the european trade with the united states ( 14 % ). similarly, the share of the eu - 15 total foreign direct investments that was orientated towards the new member states was also around 12 % and tripled since 1999. while these figures are still low compared to the fdi flows directed to the us, they are considerably higher compared to those flowing to japan. in addition, the prospect of eu enlargement has significantly sheltered the new member states from adverse spill - over effects coming from other emerging markets. with eu enlargement now in place, economic and financial integration will advance further. with the extension of the single market to the new member states all remaining barriers to trade and capital flows have been removed by now, thereby supporting further integration. it is already observable that small and medium - sized enterprises from the eu - 15 countries are becoming significantly more active in the new member states, as the economic and legal environment has become more stable upon accession. let me stress that enlargement has also led to higher competition in the eu and enhanced the scope for economies of scale following the increase in the market size. by this, productivity will rise, thereby contributing to an increase in the potential growth rate of the eu. it is important to note that also the “ previous ” 15 member states will be affected by higher competition in the eu, which could accelerate structural reforms in these countries. in fact