ADDRESS BY MR. NOEL TREACY T.D., MINISTER FOR SCIENCE, TECHNOLOGY AND COMMERCE AT GORT CHAMBER OF COMMERCE SEMINAR ON THE IMPACT OF THE EURO IN O'SULLIVAN'S HOTEL, GORT, CO. GALWAY MONDAY 14TH DECEMBER, 1998 AT 9.30 P.M.

As you probably know at this stage, the Euro will come into being as the currency of the Member States participating in Economic & Monetary Union (EMU), on the first of next month, January 1999. Eleven Member States will join the single currency and their currencies of the 11 Member States will be irrevocably fixed. In the initial phase from January 1999, for a further three years, we will continue to use our existing pounds and pennies before the final phasing-in of the euro and the euro-cent commences from January 2002. During those three years from 1999 to 2002, we will have an opportunity to "change gears" as it were. We will be able to use the Euro for cashless transactions and so become more familiar with the new reference point.

In January 1997 "The EMU Business Awareness Campaign" was established by us, and is being managed by Forfás, on behalf of our Department of Enterprise, Trade and Employment so as to ensure that Irish business was fully informed in advance of EMU of the necessary steps, which they should take in preparation for the single currency market. It is managed in close consultation and co-operation with the business and professional associations, the banking sector and the State agencies that are in close contact with firms of all sizes in all sectors of our National Economy.

As part of the National EMU Awareness Campaign, thousands of copies of information packs have been distributed. It is a comprehensive guide for business on all the relevant issues. In addition a short user-friendly brochure summarising the key issues for SMEs in relation to EMU and the changeover to the euro has been widely distributed.

A study on the various options for company strategy in the event of euro/sterling fluctuations has also been completed. The primary objective of this study was to identify a range of specific actions that companies can adopt to reduce the competitive impact of the sterling exchange rate fluctuations. For example, if you export to the UK you can invoice your customers in euros, thereby transferring any exchange rate risk to them. Another suggestion is to hold a sterling bank account from which payments could be made and to which income could be lodged. Similar publications on how the Euro will affect your retail business and IT systems have also been prepared. Indications of the state of euro-readiness of Irish firms have been ascertained from the on-going surveys that have been conducted as part of the National EMU Business Awareness Campaign.

• Two surveys have been conducted to-date, a benchmark study in July 1997 with a follow-up study completed in March of this year. Fieldwork has commenced on a third survey to be completed by mid December.

The key findings of the most recent survey are:

• 50 per cent of firms surveyed have appointed an individual to steer the company's planning and to gather information.
• 27 per cent have performed a business impact analysis.
• 51 per cent of the companies have identified the functional implications.
• 27 per cent have prepared functional work plans for the Euro changeover and,
• 12 per cent have designed tests for the practical implementation of change.

The key conclusions that can be drawn from the findings are as follows:

• Companies are now significantly further advanced in their preparations than they were in the summer of 1997, when the benchmark survey was conducted;
• A number of areas were identified where there were weaknesses in the levels of preparations by firms both at a sectoral level and on a regional basis; one of the main tasks for the National Campaign throughout 1998 has been to focus on the information needs of these areas.

You may also have heard about an EU Wide Survey which was published over the weekend. The Survey of 7000 EU Companies by Grant Thornton Accountants showed that Irish SME's are less worried about dealing with the EURO's teething problems than most of their European Counterparts. In addition, we are also more upbeat about the effects of the EURO, with 40% of businesses believing that it's impact would be positive.

Nevertheless, throughout 1999, the National Business Awareness Campaign will continue to focus its efforts on targeting Irish companies, particularly those in the SME sector. Every possible opportunity to effectively communicate the Campaign's key messages to companies will continue to be utilised.

At Government level, we are determined to ensure, that the interests of consumers are taken fully into account in the changeover from the Irish pound to the euro. Consumers must always be vigilant and to help them we are determined that they should be armed with the necessary information on the euro. I do not share the pessimism expressed by some that the introduction of the euro will lead to price increases, although I understand the reasons that they might have such concerns. For over a decade now, the general policy of successive Governments has been that strong competition and well-informed consumers are the best way to ensure that prices are kept down. That continues to be our policy. We intend to ensure that there is no "information deficit" as far as consumers are concerned.

There will also be an onus on businesses to do everything possible to show themselves fit for the euro in order to maintain their customers' confidence in the international changeover. Consumers will have to be given a feel for the new currency and businesses will need to convince their customers, that there are no hidden increases in calculating euro prices.

A National Code of Practice on dual display of prices during the changeover to the euro is currently being prepared by our Department, in conjunction with the Office of the Director of Consumer Affairs. We intend to launch a draft of this code shortly. The Code will require that dual displays of prices be unambiguous, easily identifiable and clearly legible. The Code will form part of our strategy to protect consumers in the changeover process. While the Code is based on a voluntary approach, legal underpinning would be considered to ensure that minimum standards apply across the board, should that prove to be necessary. There will be full consultation with consumer and other interests to ensure that the code of practice has the maximum support of both consumers and retailers.

The Euro Changeover Board of Ireland which was established by us, in May last, has been running a national information programme to promote greater awareness of the Euro. During the three-year transition period from next January, consumers will be able to choose to make many payments in euros. While, in general, the public sector will continue to make staff, pension, social security and other payments in our existing currency, payments in euros will be accepted by them. Public utilities such as the ESB, Bord Gais and Telecom Eireann, will continue to bill customers in our present currency, but will accept payment in euros. Banking services in euros will be available as required. I hope that as consumers become more and more familiar with the euro during the transitional period, the euro will ultimately become the vehicle for all of these transactions and the new banknotes and coins will be introduced. Existing bank accounts denominated in Irish pounds and other participating currencies will be converted to the euro without charge. The old notes and coins will be phased out over the succeeding months. Information is available in Ireland's National Changeover Plan published by the Minister for Finance, Mr Charlie McCreevy T.D., earlier this year. This is a product of much consultations over recent years with various affected interests. Contact points in the various bodies are listed.

The Plan is available from both the Department of Finance and from Forfas which has been running the National Business Awareness Campaign for sometime. For consumers, the appropriate contact is the European Consumer Information Centre in O'Connell Street, Dublin.

In addition, every month, a staff member of the Office of the Director of Consumer Affairs attends the Citizen's Information Centres in large towns, including Galway and Athlone, to answer any consumer queries that local people may have. This is advertised locally in advance.

As a final point, I would say that the move to EMU may entail some administrative changeover costs for Business and the Public Administration. However, it is important to bear in mind, that any costs incurred are an Investment, aimed at producing long term benefits for individual companies and the whole economy.

EMU will bring New Opportunities and a Larger Marketplace, in which Institutions can do Business. It will confer the benefits of lower interest rates, absence of currency translation costs and, crucially for business, stability and certainty in exchange rates throughout the Euro area. Just as we steered Ireland into the European Economic Community, over twenty five years ago, because we could not stand still, or be left behind; again we must grasp the opportunity of Economic and Monetary Union, as we face a new Millennium with confidence and vigour.