vulnerable member states loans are still contracting compared to a year ago. but the pace of contraction has slowed considerably in these economies. this reflects both improved funding conditions for banks thanks to the tltros and app, and strengthening demand for loans amid an improving economic outlook and lower lending rates. loan supply can be expected to benefit further from the staggered impact of tltros. the app should also continue to support credit growth going forward. banks gain additional liquidity from the app either through selling marketable assets or through rising customer deposits, which they can in turn use for refinancing, purchasing assets or granting loans. in their responses to the october 2015 bank lending survey, most euro area banks indicated that they had used the additional liquidity from the app for the latter – granting loans ( about 30 % ) – and over the coming six months, this pattern can be expected to continue. banks also indicated a net easing impact from the app on their credit standards over the past six months ( loans to enterprises : – 4 %, housing loans : – 2 %, consumer credit and other lending to households : – 1 % ). and over the next six months, banks expect a continued easing impact on credit standards for loans to enterprises ( – 2 % ), while the effect on credit standards on housing loans and consumer credit is expected to remain broadly unchanged. altavilla c., g. carboni, r. motto ( 2015 ) asset purchase programmes and financial markets : lessons from the euro area, ecb working paper no. 1864. bis central bankers ’ speeches chart 1 use of additional liquidity and impact of the app on bank lending notes : the net percentages are defined as the difference between the sum of the percentages for “ tightened considerably ” and “ tightened somewhat ” and the sum of the percentages for “ eased somewhat ” and “ eased considerably ”. the results shown are calculated as a percentage of the number of banks which did not reply “ not applicable ”. bis central bankers ’ speeches the effects of app appear to be stronger still when looking at the impact on credit terms and conditions ( loans to enterprises : – 29 %, housing loans : – 13 %, consumer credit and other lending to households : – 22 % ; see chart 24b ), and the reported easing in terms and conditions for enterprises is generally larger than reported in the previous survey round. this favourable impact is also expected to continue over the next six months. one should keep in mind, however, that these

of energy and nonenergy commodities, as well as large movements in the exchange rate for the canadian dollar. and these movements have in turn triggered important shifts in economic activity, as well as reallocations of production resources across sectors and regions of the country. all of this underscores the fact that we live in an era of rapid change, and we operate in a global environment that is constantly shifting. uncertainty, risks, and shocks are constant features of the economic landscape. for canada, it is particularly important that we recognize this reality, given how open our economy is to international trade and capital flows. the best approach to dealing with risks and sudden developments is to constantly ask ourselves what steps we can take to make our economy and domestic markets more flexible, and thus better able to adapt to changing circumstances. and we need to recognize that this is a shared responsibility among firms, workers, and policy makers. firms and their workers need to be able to respond quickly to technological advances and to shocks that require changes in the way they conduct business, the kinds of goods and services they produce, and the markets they choose to develop. a well - functioning marketbased economy that sends clear relative price signals is critical in this context. at the same time, policy - makers need to be wary of barriers to adjustment, such as labour regulations that inhibit the movement of workers from one type of job, or from one sector or region, to another. to enhance flexibility, to raise the growth potential of the economy, and to increase its resilience to shocks, we need policies that encourage structural reforms. for canada, structural reform has a broad context, with priorities across a number of jurisdictions. the financial system, with its vital role in supporting a healthy modern economy, has been and will continue to be one priority. an efficient and sound financial system enhances overall economic flexibility by helping to redirect capital and resources to the most productive uses, in a cost - effective way, following a shock. removing internal barriers to the free movement of goods, services, and labour is another priority. these barriers are rightly attracting attention in canada as differences in regional economic performance and shortages of skilled labour are becoming more pronounced, and as demographic challenges intensify. a number of initiatives to remove internal barriers have been undertaken over the years, but with mixed and generally modest results. the red seal program was introduced more than 45 years ago to help standardize and recognize workers'trade qualifications. the agreement on