The article discusses how investors in the euro area tend to hold more assets from within the region, known as "euro bias", due to lower costs and risks. This bias affects income smoothing in bond and equity markets. In bond markets, higher correlations and lower yield differentials can lead to negative effects on income smoothing. However, in equity markets, specialization among euro members helps create less correlated national stock markets. The more investors hold their equity portfolios within the euro region, the more they can share income risk.