More and more often, companies substitute foreign direct investment for international trade. FDI flows are growing fast. The financial sphere in Europe has changed tremendously. We now have a common currency in the euro area. Currency risk has been eliminated. Financial markets are integrating faster than ever. They have become, and are still becoming, broader and deeper.
Breadth and liquidity of financial markets, however, favour a capital-market-oriented financial system of Anglo-Saxon type. And disintermediation, in turn, fosters the breadth of capital markets. The broader and more liquid financial markets are, the more attractive they are to international investors. Thus, the euro is one of the forces working towards ever-closer financial links between national economies.