90s. however, history has shown that fear of contagion is a strong deterrent when it comes to actually resolving an important bank. and whether bailing in creditors would lead to contagion naturally depends on who those creditors are – if they are other financial institutions, the chances are that regulators will shy away from resolution. this is why two weeks ago, the financial stability board ( fsb ) proposed minimum standards for the 30 global systemically important banks concerning both the quality and quantity of bail - in debt. in particular, it was agreed that if a bank were to hold bail - in debt issued by another systemically important bank, this would detract from its own bail - in buffer, in order to discourage banks from holding critical amounts of bail - in debt issued by other banks. the euro area already has a minimum requirement for such eligible liabilities. but so far, these liabilities can be held by other institutions without restriction. in the interests of both financial stability and growth, we should adapt the standard proposed by the fsb as soon as possible. channelling credit into the most innovative and efficient companies is a crucial prerequisite for growth. but in their infancy, companies are usually not looking for credit, but for equity investors. when it comes to providing capital to innovative firms, the eu has much room for improvement. in the us, for instance, finding investors is not much of a problem for innovative companies. an innovative american firm is able on average to attract twice as much capital as an innovative firm in spain, france, or germany. investment in a new, innovative firm often takes the form of venture capital. the business model of a venture capital fund is based on developing expertise in a certain area and using this expertise to make informed bets on a number of promising firms in the industry in question. a high number of new firms fail, but the rewards to be reaped if they succeed are also high – on average, venture capital investments in the us have delivered a return of around 13 % since 1990, according calculations by the economist. for the venture capital model to work there has to be a minimum market size in order to be able to spread out investments among a large enough number of start - ups. but in europe, the markets for venture capital have been segmented along national borders. this may go some way to explaining why in europe, investments by venture capital funds in technology companies are only one - fifth the size of investments in the us.

##nt to compete on it. and more intense competition spurs innovation. in the long term, innovation due to increased competition is the main reason why market integration raises welfare. 5, 6 but for newcomers to be able to challenge incumbents, they must not trip over red tape. unfortunately, bureaucratic barriers to setting up a business are still high in many european countries – not least in germany, which ranks 114th in the world bank ’ s doing business report in this regard. spain does comparatively better, ranking 74th. but this still implies a considerable distance to the frontier of best practice. how large is the impact of barriers to entry on the overall economy? research suggests : quite large indeed. increasing entry costs from very low levels such as those observed in denmark, for example, to moderate ones like those in spain can reduce per capita gdp and total factor productivity by up to 10 % 7. and the small differences in the administrative cost of copenhagen economics ( 2010 ), the economic impact of a european digital single market, final report. badinger, h ( 2005 ), “ growth effects of economic integration : evidence from the eu member states ”, review of world economics 141, 50 – 78. boltho, andrea and eichengreen, barry ( 2008 ), “ the economic impact of european integration ”, cepr discussion paper no 6820. barseghyan, l ( 2008 ), “ entry costs and cross - country differences in productivity and output ”, journal of economic growth, 13 ( 2 ) : 145 – 167. bis central bankers ’ speeches entry between europe and the us seem to explain 10 to 20 % of europe ’ s lag vis - a - vis the us with regard to total factor productivity and the capital - output ratio. 8 removing barriers to entry therefore holds the promise of substantial gains in productivity and welfare. but these barriers can be tackled not only at the national level, but on the european level as well. the single market has been very successful in facilitating trade in goods. hence, competition in this area is intense. the mark - ups that firms are able to charge in addition to their costs due to market power are low and are comparable to those in the us, for example. when it comes to services, however, the picture looks different. mark - ups are higher, on average, than in the us. it is probably safe to say that the services directive has fallen short of expectations. this could be changed by finally establishing the “ country