The euro, the new European single currency, is to face its first major test when it makes its debut on the international financial markets on Monday.
While 30,000 people joined a street party outside the European Central Bank in Frankfurt yesterday, across Europe bankers and computer specialists were working through the weekend to try to ensure that the financial system can deal with the new currency by the start of trading. There are no early indications of any problems, but a difficulty anywhere across Europe would cause chaos next week.
Investors are preparing for their first chance to trade the euro and determine its value against the US dollar and sterling. It will start trading at around $1.17 and 70p sterling.
The new currency formally came into being yesterday, but with financial markets closed across Europe, only a small number of transactions have been made in it.
Market analysts expect a cautious start to trading next week, but see the potential in the months ahead for volatility against other major currencies, such as sterling and the US dollar.
The performance of sterling will continue to be of concern to Ireland, the Taoiseach, Mr Ahern, said yesterday at a function in the Central Bank to mark the birth of the new currency. In particular, a fall in the value of the British currency could undermine the competitiveness of Irish exporters.
The Taoiseach underlined the need to remain competitive as Ireland entered the euro and said that, if the economy was to grow as forecast by 6 per cent a year, then restraint on wages must continue.
In earlier comments, Mr Ahern also referred to the need for "a renewed model of social partnership" as the State entered monetary union.
This is understood to be a reference to the Government desire to see changes in the next partnership deal, including a new public sector pay-bargaining system and consideration of wider profit-sharing schemes across business, as a means to maintain wage restraint inside monetary union. Negotiations on a successor to Partnership 2000 are due to start shortly.
At a European level, the Government is likely to face further pressures for tax harmonisation following the creation of the single currency. A number of finance ministers speaking at the launch in Brussels on Thursday spoke of the euro as a catalyst for further political and economic integration, although the Minister for Finance, Mr McCreevy, strongly rejected this view.
Subsequent suggestions by Germany's Minister for Europe, Mr Gunther Verheugen, that target zones should be set for corporation tax rates will be strongly resisted by the Government, which insists it has EU Commission agreement on a move to a 12.5 per cent rate for all companies, and also by Britain.
At Thursday's meeting in Brussels, finance ministers agreed on irrevocable exchange rates for the 11 member-currencies against the euro. In Ireland's case the rate was set at 78.7564p. A number of major shopping chains are beginning to use dual prices on some products. A 62p litre of milk translates to 78.7 euro cents, while a £2.25 pint of beer translates to 2.86. The 85p price of The Irish Times translates to 1.08.
Euro chequebooks will be available from banks from next week, but the euro notes and coins will not come into circulation until 2002.
