, namely the establishment of financial backstops for the euro area. the european financial stability facility ( efsf ) was introduced as a temporary mechanism in 2010. two years later, the european stability mechanism ( esm ), a permanent mechanism that may funnel, under effective strict conditionality, financial assistance to euro area member states experiencing financing difficulties was established under an intergovernmental agreement. the efsf and the esm, which together have a combined lending capacity of €700 billion have, so far, disbursed about €250 billion of financial assistance to five member states. in december 2014, the esm board adopted the direct recapitalization instrument ( dri ), which provides the esm with the capacity to directly recapitalize banks in the euro area under certain conditions, thereby contributing to severing the link between banks and public finances. iv. the way forward : a longer - term view let me now briefly highlight two areas that could be of overriding importance for the more longer - term future design and functioning of the european union and the euro area, i. e. the capital markets union and the way towards a type of “ fiscal union ”. the capital markets union the capital markets union ( cmu ), which is high on the agenda of the luxembourg presidency, is a major undertaking, a genuine european - wide project. the cmu is welcomed by the eurosystem, which delivered its opinion several months ago. on 30 september 2015, the european commission issued its action plan on building a capital markets union. 11 it aims to put in place the building blocks of a well regulated and fully functioning cmu in the eu by 2019. while the details of the design of the cmu remain to be defined, given the complexity of the undertaking and the potentially far - reaching implications, a thorough stock - taking of the issues at stake should be followed by prioritized and targeted outcomes. the cmu is intended to deepen the integration of capital markets in the european union. deeper integration would foster the efficiency of capital markets by providing businesses with access to a wide range of sources of capital from all over the european union and by offering investors and savers additional investment opportunities, thereby enhancing economic growth and job creation. in this context, let me recall that the eurosystem is particularly supportive of measures aimed at reviving securitization. it welcomed the draft eu regulation introducing criteria for simpler, more transparent and standardized asset backed

of these were of an external origin. this said, let me take a step backwards to the period after world war i. after world war i, the german zollverein was dissolved and luxembourg had to look for a new economic partnership. in a referendum organized in 1919, a large majority of the luxembourg population expressed a preference to enter into an economic union with france. however, such an interest was not reciprocal and luxembourg finally turned to belgium, which led to the establishment of the belgo - luxembourg economic union. the economic union, mainly based on a customs union, became effective in 1922. it included elements of monetary cooperation, which led to the establishment of a monetary association between belgium and luxembourg in 1935. the monetary association was highly asymmetric. luxembourg was not granted a central bank and was not directly involved in monetary policy decisions. in a nutshell, it had no monetary sovereignty. carlo hemmer. bis central bankers ’ speeches with the introduction of the euro, the monetary association was dissolved. as requested by the maastricht treaty, luxembourg established a national central bank in june 1998, before the introduction of the euro. this very succinct overview shows that economic and political integration have throughout luxembourg ’ s history been a key factor for the development of the luxembourg economy, a very small open economy, which is export - led and partly import - driven. i mentioned the zollverein, followed by the creation of the belgo - luxembourg economic union2 and monetary association. that process was followed by european integration, starting with the european coal and steel community ( ecsc ), and followed later by the creation of the european economic union and the european union. the symbiotic relationship with europe has served the country well and the pro - european public opinion in luxembourg towards europe has remained unscathed despite the challenges the country, the european union, and, more specifically and recently, the euro area have been facing over the years, especially the global financial crisis that started unfolding some eight years ago. this brings me to the luxembourg presidency ’ s programme, which is ambitious and based on seven pillars : – stimulating investment to boost growth and employment, – deepening the european union ’ s social dimension, – managing migration, combining freedom, justice and security, – revitalising the single market by focusing on its digital dimension, – placing european competitiveness in a global and transparent framework, – promoting sustainable development, – strengthening the eu ’ s presence on the