not negligible. 12 / 16 bis central bankers'speeches one problem, however, is that not all countries are equally successful in accessing them. one reason for this is linked to the importance of institutional quality, which i mentioned earlier. you can see this on the chart on the right - hand side, which suggests there is a positive correlation between institutional quality and a country ’ s ability to effectively absorb available transfers and secure new funding opportunities. such patterns are even more visible when considering eu funding opportunities for social policies, education and training. 31 under the european fund for strategic investments plan, for example, cesee economies have only been able to attract less than 5 % of total funding allocated to social infrastructure projects. this means two things. first, we need to strengthen the ability of receiving economies to access and absorb funds. this should be part of the broader effort to improve institutional quality. second, eu allocation rules should be made as simple as possible. the european commission has already made several important suggestions in this respect, with a single rulebook planned to cover several eu funds, less red tape and lighter control procedures for businesses and entrepreneurs benefiting from eu support. 32 such initiatives are essential if we want people and companies to take full advantage of the opportunities that the eu provides. conclusion let me conclude. 13 / 16 bis central bankers'speeches achieving similar standards of living across our continent should speak to our highest aspirations. it is a recognition of history that economic prosperity, opportunity and peaceful societies are closely linked and mutually reinforcing. the prospect that relative income levels in europe, without further action, will remain unacceptably large for the foreseeable future is therefore a warning sign. it should urge policymakers to think in new ways about how convergence can be accelerated, and what role europe itself should play in this process. i have highlighted today that we must begin by acknowledging that convergence requires joint efforts and responsibility. it requires member states to translate eu initiatives and recommendations into concrete and positive effects on the ground, and candidate countries and potential candidates to achieve institutional excellence as early as possible in the transition process. convergence must be built on strong institutions. and adhering to standards, eu standards, is a powerful vehicle for growth. accelerating convergence also requires the eu, and the euro area in particular, to help underwrite this process. this includes completing the single market, building a new digital market and being serious about developing a true capital markets union. transition economies need both the market and the

slide, most of these countries are still classified as modest or moderate innovators. there have been some notable improvements in certain countries over time, but in others the process of gradually catching up with their eu peers appears to have stalled, or even to have backtracked, in recent years. 9 / 16 bis central bankers'speeches the first priority is therefore to complete the single market for services, which already account for two - thirds of global gdp and employment, and represent many of the potential growth sectors in the age of digitalisation and automation. research by the escb ’ s competitive research network ( compnet ) shows, for example, that many firms in the eu services sector are far behind the productivity frontier, particularly in cesee economies. 21 reallocating capital and labour to more productive firms would help boost overall competitiveness and support employment. a second, and more direct, avenue is to increase efforts to build a “ european data economy ”, or a digital single market, as also advocated by the european commission in its communication last week. 22 digitalisation offers a particularly promising opportunity for catching - up economies to leapfrog more advanced economies and adopt new technologies faster than them, thereby mitigating the risk of being hurt by reshoring and premature deindustrialisation. convergence and the role of the capital markets union the second key area where europe can help – which is close to the heart of this conference – is by channelling funds to where they can be used most productively. there is compelling evidence of the importance of finance for technological innovation and, ultimately, long - run growth rates. 23 differences in the quality of financial intermediation across countries have been found to have significant implications for economic growth. 24 in particular, research is increasingly challenging the view that bank and market - based finance tend to support economic development and living standards in similar ways. 10 / 16 bis central bankers'speeches evidence is growing globally that large banking systems are associated with more systemic risk and lower economic growth, in particular as countries grow richer. 25 in addition, recent work by ecb staff highlights that, during the euro area sovereign debt crisis, capital misallocation increased substantially among firms that were more reliant on bank finance. 26 other research suggests that deeper equity markets are more effective in promoting innovation and productivity and, hence, in bringing economies closer to the technological frontier. 27 recent ecb research, for example, suggests that if an eu member state were to increase its