’ earnings. on the other hand, an electronic, fully automated sepa environment means that banks will benefit from efficiency gains and potential economies of scale. the ecb ’ s study also reflects banks ’ expectations that, in the future, more use will be made of more alternative, innovative payment methods than cash. 1 the ecb, as well as the national central banks, are striving for more integration in the financial markets. public authorities are responsible for providing an adequate framework that is conducive to such financial integration, i. e. legislation and rules for cross - border transactions that guarantee a level playing - field for all market participants. the adoption of the payment services directive in 2007 was a major step in this regard. now it just needs to be transposed into national law. the impact of sepa schmiedel ( 2007 ), “ the economic impact of the single euro payments area ”, ecb occasional paper series, august. the impact of sepa is expected to be substantial. a recent study conducted on behalf of the european commission 2 mentions that banks and their customers are expected to benefit from sepa. it is calculated that these benefits could reach €123 billion ( cumulative over six years ). however, the study also clearly points out that, if stakeholders are reluctant to embrace sepa and if the migration towards sepa does not take place in a timely and comprehensive manner, there are likely to be fewer benefits for customers and banks and corporates could even record losses – for example if participants have to run systems in parallel due to a slow migration process. for corporates, sepa will have an impact in three areas in particular : • first, sepa will simplify payments. for their incoming and outgoing euro payments, corporates will be able to use a pan - european, single set of instruments and arrangements based on the latest international standards. pricing is expected to be competitive and services will improve due to the competition at the pan - european level. • second, sepa provides greater clarity and will enable corporates to manage and transfer their liquidity in a cheaper and faster manner. sepa provides clarity on the timing of payment processing cycles and possible revocations. for example, thanks to sepa, corporates are aware of the maximum processing time for payments, as well as the maximum amount of time customers have to revoke a direct debit in europe. • third, additional standards are being created to optimise processes, as well

downside risks materialize, foreign activity and demand for u. s. exports could weaken and financial market conditions could tighten further. of course, economic growth could also exceed our projections for a number of reasons, including the possibility that low oil prices will boost u. s. economic growth more than we expect. at present, the committee is closely monitoring global economic and financial developments, as well as assessing their implications for the labor market and inflation and the balance of risks to the outlook. as i noted earlier, inflation continues to run below the committee ’ s 2 percent objective. overall consumer prices, as measured by the price index for personal consumption expenditures, increased just 1 / 2 percent over the 12 months of 2015. to a large extent, the low average pace of inflation last year can be traced to the earlier steep declines in oil prices and in the prices of other imported goods. and, given the recent further declines in the prices of oil and other commodities, as well as the further appreciation of the dollar, the committee expects inflation to remain low in the near term. however, once oil and import prices stop falling, the downward pressure on domestic inflation from those sources should wane, and as the labor market strengthens further, inflation is expected to rise gradually to 2 percent over the medium term. in light of the current shortfall of inflation from 2 percent, the committee is carefully monitoring actual and expected progress toward its inflation goal. of course, inflation expectations play an important role in the inflation process, and the committee ’ s confidence in the inflation outlook depends importantly on the degree to which longer - run inflation expectations remain well anchored. it is worth noting, in this regard, that market - based measures of inflation compensation have moved down to historically low levels ; our analysis suggests that changes in risk and liquidity premiums over the past year and a half contributed significantly to these declines. some survey measures of longer - run inflation expectations are also at the low end of their recent ranges ; overall, however, they have been reasonably stable. monetary policy turning to monetary policy, the fomc conducts policy to promote maximum employment and price stability, as required by our statutory mandate from the congress. last march, the committee stated that it would be appropriate to raise the target range for the federal funds rate when it had seen further improvement in the labor market and was reasonably confident that inflation would move back to its 2 percent objective over the medium term. in december, the committee judged that these two criteria had been