explain why. first of all, let me recall that over the past decade, the preparations for enlargement have already had a significant impact on the european economy, especially in terms of trade and financial integration between the new and the existing eu members. profound structural changes in the new member states in the past 15 years alongside with sub stantial progress towards the opening of markets early in the transition process ( mainly through the implementation of the so - called europe agreements ) have led to a tremendous increase in trade with the new member states. since 1995, the share of the current new member states in the eu - 15 exports and imports outside the eu ( so - called extra - eu exports and imports ) has increased by an impressive 50 % to more than 13 % and almost 12 %, respectively. likewise, impressive progress has been made during the past decade in terms of financial integration. substantial inflows of foreign direct investment ( fdi ), constituting by far the largest share of total cumulative net private capital inflows to the new member states, stand out in this respect and, in fact, fdi has been a key driver of productivity growth and export dynamics. especially after the russian crisis at the end of the 1990s, fdi flows from the eu - 15 to the new member states increased spectacularly and, according to the most recent data, the share of the current new member states in the eu - 15 ’ s total extra fdi outflows amounts to more than 12 %. the enlargement of the single market is beginning to strengthen the degree of competition as the accession of the new member states increases the number of suppliers within the single market. in addition, an enlarged single market is enhancing the scope for economies of scale. these effects should lower prices and increase productivity, thereby contributing to an increase in the potential growth rate. furthermore, the extension of the single market should increase the range and varieties of products available to producers and consumers. however, these clear benefits do not come automatically. to what extent and how quickly they can be reaped depends critically on whether macroeconomic conditions are stable and the extent to which structural reforms are implemented. from a central bank perspective, enlargement marks the beginning of a process which will lead to the integration of new member states in the euro area, as these countries have no opt - out clause. this integration is taking place in a well - defined institutional framework and comprises several stages. the first phase for the new member states is the

luis de guindos : financial stability in the euro area welcome address by mr luis de guindos, vice - president of the european central bank, at the meeting of the council of presidents of businesseurope, madrid, 1 june 2023. * * * yesterday we published the latest edition of the ecb's financial stability review, which is issued twice a year. in my remarks today, i will provide you with the main findings of our analysis. two key developments have shaped the macro - financial environment over the past six months. first, there has been some improvement in the growth and inflation outlook since late last year. macro - financial conditions have improved on the back of a robust post - pandemic recovery, fading global supply chain disruptions and lower energy prices. at the same time, the outlook remains fragile, given downside risks to growth and relatively sticky core inflation. a second key recent development concerns financial turbulence witnessed this spring, with the spotlight increasingly turning on systemic risk concerns following bank failures outside the euro area. strains in the us and swiss banking sectors in march introduced an element of stress into a highly uncertain environment. while the fallout experienced by euro area banks was limited, these events have served as a timely reminder of just how much the preservation of financial stability depends on the shock - absorption capacity of the financial system. all the more so in an environment where financing conditions are being tightened to tackle elevated inflation around the world. framed by these recent developments, our current assessment is that financial stability vulnerabilities in the euro area remain elevated. tighter financing conditions to address high inflation have contributed to a reappraisal of the economic outlook alongside an orderly reversal of overly compressed asset price risk premia. euro area bank fundamentals are solid, thanks to the strength of banks'capital and liquidity buffers under stringent regulation and supervision. at the same time, continued improvements in asset quality and profitability are contributing to bank resilience. but there is no room for complacency. bank liquidity challenges could yet intensify. rolling over maturing bonds is pushing up banks'market funding costs, while competition for deposits is likely to rise and translate into faster deposit repricing. haircut and margining risk has also increased due to higher volatility in government bond markets. muted economic growth and signs of weakening credit quality pose downside risks to bank earnings. the outlook for banks has thus become more uncertain, with liquidity asset quality