in some quarters as a source of insecurity rather than a bulwark against it. one country has even decided that it is better to reverse that process than continue it. this insecurity in part reflects common factors emerging across western democracies, such as fears about immigration, globalisation and social change. but in europe there are also unique forces at play. in particular, the severity of the euro crisis has weakened faith in the eu as a foundation of economic security. so europe, and even more so the euro area, faces a moment of decision. we need answers to the questions that citizens are asking. but those answers also need to be balanced : there are things that need to change in europe, but there is much we can be proud of as well. european integration has produced many achievements and we should not let our current difficulties diminish them. on the contrary, we need to be confident in the progress we have made – and clear that we would be worse off without it. 1 / 6 bis central bankers'speeches but where things evidently need to be better, we need to make them so. most importantly, that means making the changes in our monetary union that all can see are necessary. the significance of the single market since its formation in 1957, the european project has been built, above all, on a commitment to openness, epitomised by the establishment of a single market among its member states. this commitment was idealistic, but it was also eminently pragmatic. the founders of the eu had witnessed the damage caused by the inwardness and protectionism of the interwar years. they understood that sustaining economic growth was vital to drain support for divisive nationalism, and the best way to achieve this was through open markets. though the last decade has been difficult, over the long sweep of post - war history their vision has been proved right. since 1960 cumulative growth in gdp per capita has been one - third higher in the eu15 than in the united states. private wealth, which had been twice wiped out by the wars of the twentieth century, has also doubled as a percentage of national income. this was of course partly driven by the natural catching - up process after the second world war. but there is plenty of evidence that growth has been accelerated by integration. according to one estimate, the eu ’ s gdp per capita would be as much as one - fifth lower today if no integration had taken place since the war. 2 another

schuler et al. ( 2015 ). see ari, kok, paries and zochowski ( 2015 ). plantin, g. ( 2015 ). harris, opp and opp ( 2014 ). bis central bankers ’ speeches interaction with financial cycles. this is also because cross - country spillovers tend to be stronger the more integrated financial systems are. they might thus gain in importance with the launch of the banking union. macro - prudential policies could be weakened or strengthened because of cross - border spillovers. spillovers depend on the behaviour of both borrowers and lenders following a macro - prudential policy action. positive spillovers reduce risks to financial stability, while negative spillovers raise these risks. let me give you an example. if a country ( say, country a ) raises capital requirements in response to excessive domestic credit growth, a neighbouring country that also experiences excessive credit growth ( say, country b ) might benefit from this measure. if financial markets are integrated, banks in country a will reduce their lending in country b, thus contributing to a slowdown in financial exuberance. however, if financial markets are segmented, or if financial cycles are not synchronised and country b is experiencing weak credit growth, the sign of the spillovers from the same macro - prudential measure may turn from positive to negative. negative spillovers clearly pose a threat to the effectiveness of macro - prudential policy. for policy - makers, it is therefore crucial to be aware of the possibility of such spillovers and their respective propagation channels, co - ordinate policies to the best extent possible and apply mitigating measures to minimise leakages. the sign and the strength of these spillovers depend on the type of macro - prudential instrument, the linkages between the two economies and their financial sectors as well as the level of the synchronisation of the cycles. to add another layer of complexity, the spillovers from ltv policy could be qualitatively different than those from capital policy. following the introduction of a ltv cap, banks may find it profitable to reallocate lending abroad, thus generating negative spillovers on the neighbouring country. based on the available literature, the empirical quantification of cross - border spillovers remains limited. some evidence based on the u. k. experience suggests however, that resident foreign branches increased lending after capital requirements were tightened for local banks. additional evidence based on