Preparations to ensure there are no major difficulties in relation to Ireland's entry to EMU on 1 January 1999 are well under way. For example, on 5 May last I established the Euro Changeover Board of Ireland, ECBI, to oversee the practical implementation of the changeover to the single currency, the euro, and to provide public and consumer information in that regard.
As regards the fractional reserve system, it will be a matter for the European Central Bank, ECB, to decide what, if any, fractional reserve system will operate in the euro area. Under the Central Bank Act, 1971, reserve requirements for Irish banks are set by the Central Bank: I understand from the bank that the reserve requirements operating in Ireland are broadly comparable with those of other European countries and that there is no reason to expect ECB requirements to significantly affect the lending capacity of Irish banks. In EMU, bank customers will have better access to both deposit and borrowing facilities, as bank liquidity will be more readily available across national borders. It is not expected that EMU will have a major impact on the consolidated balance sheet of the Irish monetary sector.
