Also economic agents can invest more easily in any part of the euro area and thereby spread the risk of potential local shocks having an impact on income and consumption. 7 In 1973 Robert Mundell made a second seminal contribution to the debate on currency areas.
He explicitly discussed the role of financial integration, in the form of cross-country asset holding, in international risk sharing. Countries sharing a single currency can mitigate the effects of asymmetric shocks in particular by diversifying their income sources and by adjusting their wealth portfolio.