On this day next year the euro will be in its second day of existence. There is now little doubt that the single currency project will launch on schedule at the start of 1999 and that Ireland will be one of the founding members.

The giant leap to creating monetary union across as many as 11 EU states will be taken. Political imperatives dictate that it must happen, even if many of the economic questions remain unanswered and the risks uncalculated. It is an economic experiment without precedent.

True, single currencies operate across many large and diverse economic areas such as the US and Australia. But never before has a single currency been created across a group of diverse industrialised states.

The impact of the project will be felt in every corner of economic life. If it works, the single currency will create a giant single economic space across the EU. The rise in crossborder trade and investment seen over recent years partly due to the EU single market programme will accelerate. And if the single currency fails to grab the confidence of consumers and business and leads to major economic problems, then the consequences for the EU will be dramatic.

At the moment, the project appears to be very much on course. And moving into this year the timetable will dominate the economic landscape. This spring, the EU Commission and the European Monetary Institute will publish their views on who should join monetary union. And on the May-Day weekend, EU leaders will sit down to decide on the make up of what looks like the "first eleven". All the EU member-states except Britain, Denmark, Greece, Sweden and Finland look set to join in the first wave.

There is still scope for plenty of rows. The German attitude to such a large group moving in the first wave remains unclear, for example. And the precise relationships between those inside the single currency and those outside remain to be sorted out.

But such is the momentum behind the whole project that it simply must happen. Government officials and central bankers have spent years preparing. Big business is now seriously engaged in preparation both at a technical level and in terms of strategy. And consumers across Europe are now being prepared for what lies ahead and will face a blitz of "information" in the coming months. In Ireland, the debate has had two main focuses. First, several economists have argued that Ireland should not enter with the first group because Britain, our largest trading partner, is staying out. Second, there has been considerable debate about the rate at which the pound should be tied into monetary union.

Both these debates are important. But no matter what the arguments against, it now appears certain that we are going in on January 1st, 1999. As regards the rate of entry, it should be realised that there is no "right" rate for Ireland. We are abandoning our independent currency and what level it might otherwise have traded at in the years ahead would be influenced by a whole range of unpredictable factors.

Other crucial points now deserve attention. What is certain, for example, is that the single currency will speed up the process of international rationalisation in many businesses ranging from manufacturing to wholesaling to financial services and lead to a new era of cross-border competition.

The Irish financial sector, for example, is facing a period of major change. For a start, the revenue-earning foreign exchange business will shrink dramatically, while Government bond dealing income will also be cut as the Irish market becomes an offshoot of the larger euro market.

Beyond this, the advent of the euro can only speed the process of rationalisation and mergers both within sectors of the financial industry here and across Europe. And as big EU financial organisations plant flags across the euro zone, it is only a matter of time before the Irish banking sector, for example, attracts the full attention of major international players.

Where does this leave Irish business? It will put a whole new focus on competitiveness in many sectors of industry. For years business here struggled to perform on international markets. At the overall economic level this was reflected as our currency, the pound, devalued against the currencies of more productive economies such as Germany. Over the past couple of years, industry here has become much more competitive and the growth rate has soared.

Once inside the single currency, the challenge will be to maintain this level of performance in the long term, as well as being strategically astute enough to deal with the new economic environment.

The single currency will also bring another challenge to Ireland. It will require businesses to operate with even greater flexibility. For example, if sterling tumbles sharply, then Irish industry will have to be able to either cut costs or accept lower-profit margins in order to remain competitive on what remains our biggest export market.

At a national level, policymakers will also find their hands tied, particularly as interest rates will be set by the European central bank in Frankfurt. True, we will have a seat at the policy-making table, but interest rates will be set at levels to suit economic conditions in the big central EU economies. At times this will suit Ireland; at other times it will not.

So the onus on policymakers and companies will be to find ways to adjust and be flexible inside the single currency. The level of national debate on this key subject has so far been abysmal. The danger is that unless we work out in advance how we will, for example, cope with a downturn in sterling's value, then if it happens the price may be paid through job losses. And make no mistake, adjustment to economic problems inside the single currency will be up to the individual member-state. Despite strong economic arguments, the introduction of the single currency will not be accompanied by an enlarged central EU budget.

In the US, a state that runs into trouble benefits automatically from the support of the Federal exchequer. This will not be the case inside European Monetary Union.

In terms of currency matters it may be a case of "all for one and one for all", but in other ways it will be a case of "every man for himself" inside the single currency.

Creating the euro will indeed be an extraordinarily bold economic gamble. This time next year we will still be basking in the afterglow of the new currency's creation.

From then on Ireland's success within the single currency will depend on its ability to build on the improvements in productivity of recent years, while also introducing a new level of flexibility and nimbleness into the economy. Beyond that, a British decision to join soon after the creation of the euro would remove much of the risk to Ireland of membership of the euro club.

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