Indeed, a lack of real convergence in income levels is, more often than not, the result of a lack of convergence in institutional quality.19 You can see this on my next slide – a slide I like to show because I think it makes a compelling point, notwithstanding the usual caveat on the two-way causality between institutional quality and income levels.20  8 / 16  BIS central bankers' speeches  Most CESEE economies are still in the lower left-hand corner, meaning there remains a significant gap in overall institutional quality compared with the average level observed in the EU as a whole.
Some EU Member States have recently renewed their interest in the process leading to participation in the exchange rate mechanism (ERM II) and the adoption of the euro. This could become a fundamental catalyst for institutional reforms in the years to come. Second, the scope of the Single Market must be broadened.