The Bundesbank president, Dr Hans Tietmeyer, as usual, had the last word on the weekend meeting of EU finance ministers. From next spring, he said, there will be a de facto monetary union after EU governments announce the states which will join monetary union and the exchange rates at which the currencies will be locked together.
Formally, monetary union will start on January 1st, 1999, when the member currencies will be irrevocably linked. But the finance ministers hope that next spring's announcement - probably to be made on the first weekend in May - will mean that the process starts to fall into place eight months earlier.
The outcome of the meeting gives some breathing space to the Government and the Central Bank. There had been some fears that if the mechanism for setting currency values was decided early, then they would be forced into stating the value at which they believe the pound should join.
Postponing the decision on how exchange rates for entering monetary union will be set until next spring, Irish policymakers hope, will allow the pound to drift down in value against the other ERM currencies, in tandem with an expected decline in sterling's value.
As speculation of an early revaluation of the pound wanes, the Irish currency could thus face some selling pressure, although the value of sterling will remain a key factor. But the weekend announcement also has other implications for Irish markets.
If the markets believe that monetary union is now on course and that next spring's announcement represents an effective starting date, then short-term interest rates across Europe could converge more quickly than expected. For Ireland, this could mean that borrowing rates here could start to fall before long, as investors start to factor in next spring's announcement.
The Central Bank would, no doubt, prefer to keep interest rates where they are, so as not to add fuel to the economy's fire. But if investors' confidence in monetary union going ahead grows, then it is only a matter of time before interest rates start to fall to Continental EU levels.
The weekend's meeting was an attempt to start to win this market confidence in the EMU process. It remains to be seen, of course, whether investors are yet fully convinced.
However, while the bilateral exchange rates at which each member currency will lock against the others will be announced next spring, the rate at which all will convert into the euro and trade against other currencies such as the US dollar will not be decided until the end of 1998.
