For the Irish stock market, and indeed the stock markets in the 12 euro-zone countries, the arrival of the euro means business as usual.

All euro-zone markets have been trading stocks and bonds in euros for the past three years, and all securities in these markets have been denominated in euros since the beginning of 1999. If the rest of the economy manages the changeover to euros as well as the stock markets, then the transition will be smooth.

Ahead of the January 1999 switch to trading euros, there were many who doubted the ability of European stock markets to handle the changeover. But as events transpired, the Jeremiahs were proved wrong and the Irish stock market - criticised by some in the market for alleged technical shortcomings - managed the transition without a hitch. Since then, the Irish Stock Exchange has consolidated its position as a euro-zone market after adopting the Deutsche Boerse's Xetra trading platform.

For individual investors, the past three years since the arrival of the euro has meant little change. Their shares switched from being denominated in Irish pounds to euros. Dividends were declared in euros, although in many cases were still being paid in Irish pounds ahead of the formal changeover.

Most media organisations reported stock prices in both currencies to ease the transition for investors, and The Irish Times continued to report stock prices in both currencies until a couple of months ago.

For public companies, the physical changeover to the euro was relatively seamless as regards financial reporting. Most of the large and medium-sized Irish plc's immediately began reporting their accounts in euros, and switched their trading to the new euro-zone currency.

But in one major respect, the switch to the euro three years ago presented Irish plcs with a major challenge. Until the end of 1998, Irish public companies had, in effect, a captive investment market, especially among domestic pension funds that had to balance their Irish pound assets against their Irish pound liabilities.

But the arrival of the euro meant that fund managers were no longer largely confined to Irish securities, as they now had the opportunity of matching euro liabilities with euro assets. This meant that there was a steady outflow of investment funds from Irish stocks to euro-zone stocks and presented Irish plcs - large and small - with the major challenge of coping with the outflow of domestic investment funds into European securities.

Before the euro, it was estimated that more than 35 per cent of domestic fund assets were in Irish equities. But the rebalancing of pension fund portfolios has meant that Irish equities now account for less than 15 per cent of the average portfolio and in many cases far less than that figure.

For most fund managers, European indices such as the FTSE Eurotop 300 or the Dow Jones Eurostoxx 50 have taken over from the CAC, DAX or the ISEQ as the investment benchmark.

While all Irish plcs suffered from this outflow of funds, it was the small- and medium-capitalisation companies that suffered most from this reallocation of assets. With the euro zone open to them as an investment area, many fund managers simply decided that small- and medium-cap Irish companies were no longer worth the trouble and shifted their funds into larger euro-zone companies.

What constituted a small- or medium-cap company? Anecdotal evidence has it that €500 million market cap was the minimum value that would be of interest to fund mangers.

But now most in the market believe that companies worth less than €1 billion are becoming increasingly peripheral. Certainly, the average euro-zone fund manager is unlikely to even look at an Irish company worth much less than €1 billion.

Some Irish plcs - especially the larger ones - responded to this change in the investment market with an aggressive investor-relations programme aimed at attracting overseas investment. Some of these had spectacular success in this reward and now seeing the likes of Fidelity, Morgan Stanley, Franklin or Capital on shareholder registers is not unusual.

But other, mainly smaller plcs suffered from the fall-off in investor interest and fell to valuations that resulted in their acquisition, in many cases by their management.

There has also been a move, albeit a very slow one, to consolidation within distinct sectors, such as Kerry's takeover of Golden Vale and the Barlo/Athlone Extrusions deals.

With the exception of Eircom in 1999, there has hardly been an Irish flotation of any great consequence. Many of the smaller companies that floated either suffered from the technology boom and bust or were simply bought out by larger companies within their sector.

Now the general view is that the outflow of domestic investment funds has probably slowed to a trickle. But the influx of overseas investment has mainly concentrated on the large plcs with proven records.

The difficulties facing small and medium-sized Irish plcs are unlikely to improve and the next year or two will probably see an increase in the pace of consolidation, with the Irish market becoming leaner and fitter.