Vol. 495 No. 2
133 Mr. Durkan asked the Minister for Finance the measures, if any, he feels necessary to protect the IR£ after 1 January 1999 having regard to the volume of trade between Ireland and the United Kingdom and the non-participation in EMU by the United Kingdom; and if he will make a statement on the matter. [19630/98]
As the Deputy is no doubt aware, Ireland will participate in economic and monetary union (EMU) from 1 January 1999, when our currency will be the euro. The euro conversion rate of the Irish pound will be consistent with ERM central rates, as announced on 2 May last; the ERM central rate of the IR£ against the Deutsch Mark is DM 2.48338. Under the EU Treaty, the European system of central banks is responsible for defining and implementing the monetary policy of the Community and conducting foreign exchange operations in relation to the euro.
The United Kingdom represents a substantial but declining proportion of Ireland's trade with other countries. Under the terms of a protocol attached to the Maastricht Treaty, the UK has notified the Council of Ministers that it does not intend to move to the third stage of EMU on 1 January 1999; the UK may, however, reverse its notification at any time after the beginning of that stage.
The position of the UK is therefore that of a non-participating member state. However, economic and monetary interdependence between participating and non-participating member states will be strong and the UK will be included with all the other member states in the co-ordination of economic policies at EU level. In particular, Article 109m of the EU Treaty requires that each member state treat its exchange rate policy as a matter of common interest.
A key concern for many Irish individuals and firms is, of course, how sterling will perform against the euro. The current strength of sterling provides opportunities for Irish businesses to improve competitiveness and enhance its capacity to deal with shocks, wherever they might come from. The Government is not ignoring the need to prepare for the possibility, no matter how remote, of problems arising for Irish industry as a consequence of sterling falling significantly below its equilibrium level. Last July, as part of its EMU business awareness campaign, Forfás published a document which identifies actions in the fields of finance, marketing and distribution that firms could consider as part of their planning to cope with any fluctuations in exchange rates that may arise between the euro and sterling. The document is included in the campaign's information pack for business.
