Banks and building societies have introduced a code of practice to govern how they handle the changeover to the euro.

The " Standard of Good Practice " commits the financial institutions to convert accounts denominated in pounds into euros without charging. This will apply to current, loan, savings and mortgage accounts.

Conversions of incoming and outgoing payments from euros into pounds will also be carried out without charge.

The conversion of participating currencies into euros will be done at fixed euro conversion rates which will be clearly shown, the standard says. Any charges applied will be shown separately, it adds.

The standard has been produced by the Irish Bankers Federation and the Irish Mortgage and Savings Association.

In terms of cash the standard says "household amounts" up to an overall total of at least £500 will be converted to euros free of charge. This will apply from January 1st 2002 when euro notes and coins will be introduced.

If the amounts are more than £500 individual financial institutions will decide whether to charge additional amounts.

The standard says financial institutions will carry a dual display of pounds and euro balances in their account statements. It says in cases where financial institutions charge for conversions or where they do not implement one or more provisions of the practice, "they should provide clear and transparent information concerning those conversion charges".

This means providing customers with written information on any conversion charge which they propose to apply, it adds.

The standard should be implemented by January 1st, 1999, "at the latest" and earlier if "technically feasible".

Mr Paul McGarry, a barrister, former adviser to the European Commission and a member of the Single Currency Changeover Board, said that while the standard was welcome the ambiguity over the term "household amounts" should be cleared up.

"Retailers for example may want to convert large amounts of cash and they would like to know what the likely charges will be," he said.

He added that financial institutions have still to outline what charges they will be levying on foreign exchange transactions between 2000 and 2002. He said that any new financial regulator may need to look at the area of bank charges after 2002.