While the immediate contribution (5 pre cent) to the level of output may be relatively modest, at a stroke the area of the EU will expand by 25 per cent and its total population by 20 per cent. In due course, also, enlargement could have major implications for the governance of the ECB.
With regard to the long-term implications, the Basel Committee’s assessment found that there are clear economic benefits from increasing the minimum capital and liquidity requirements from their current levels. The benefits of higher capital and liquidity requirements accrue from reducing the probability of financial crisis and the output losses associated with such crises.