Bank charges on foreign exchange transactions are being "misrepresented" and "misunderstood", according to the Institute of Bankers. Its newly-elected president, Mr Brian Goggin, said it was "disappointing" that bank foreign exchange charges were being wrongly interpreted.

"I believe we have complied fully with every EU recommendation and, indeed, with every aspiration of the authorities, and that prices in Ireland compare favourably with the other euro-land states," Mr Goggin told members of the Institute yesterday.

"It is very important that the public's confidence in the project is not undermined and I am certain that the banking industry will play its full part."

Mr Goggin, who is chief executive of Bank of Ireland's corporate and treasury division, also noted the unprecedented levels of scrutiny and intense criticism levelled at the banking sector, particularly last year, which has prompted calls for changes in its regulation.

A commission headed by the former Progressive Democrat TD Mr Michael McDowell is currently examining how the many regulatory bodies might be brought together into a more effective and transparent body. It will be advising the Government on its findings.

Mr Goggin stressed that the banking sector has no fears of regulation, but acknowledged the need to restore consumer confidence in Irish banks.

"It is clear that consumers' faith in the existing regulatory process is at a low ebb and it is important and worthwhile that this should be addressed. I am hopeful that a coherent and workable set of proposals will emerge which will not only provide an effective regulatory environment for our industry, but which will restore public confidence and, most importantly, consolidate Ireland's position as an attractive location for financial services investment," he said.

The sector is also facing a further significant challenge this year when its ability to cope with the millennium computer bug will be fully tested. The Y2K problem brings home the fragile nature of economic growth, he warned.

"Ireland is doing very well right now, and we should continue to do so for some time to come," said Mr Goggin. "But we must factor in the external threats which could derail our progress and we must be prudent in our use of the surpluses being generated in these exceptionally good times."

The banking industry must continue to invest in the development of technology, new delivery channels and its staff, he added.