As a result, total net capital stemming from EMEs taken as a whole flows uphill to advanced economies (the Lucas paradox), even though private capital continues to flow downhill, as the theory would predict.
Conclusions The introduction of the euro stands for a profound and irreversible change in European integration. The euro did not only replace the participating currencies, it has given a new dimension to the single market by introducing changes in the structure of the European financial markets that now match the size of the single market.