NO Irish institution will be immune from takeover following the introduction of the EU single currency, the governor of the Central Bank warned yesterday.

Speaking at the National Question Conference in St Patrick's College, Maynooth, Mr Maurice O'Connell, said considerations of national pride and national ownership require a preference for continuing Irish ownership.

"It would be disappointing if the greater proportion of our financial services industry were to pass out of Irish ownership."

He also warned that foreign owners would not be as "fully attuned" to the national interest, especially in crisis situations.

However, Mr O'Connell noted, it was not possible to enforce Irish ownership.

"The best guarantee of Irish ownership is that institutions be efficient and profitable," he said. He added that there was nothing wrong with State ownership, once it put a premium on efficiency.

Mr O'Connell also warned about the power of the international markets, which were effectively "in control".

According to the governor, the markets are driven solely by profit and there are inherent dangers in this. "Some people feel it may be time to move towards an international or supranational authority to shift the balance of power," he noted.

In a wide ranging summary of the Irish financial sector, Mr O'Connell warned that, in any event, rationalisation was unavoidable in the sector.

The lFSC, however, is likely to experience further growth, according to Mr O'Connell.

The governor admitted that concern about sterling's performance may be well founded. "It would be naive to ignore this reality."

However, he added it should not blind us to the longer term benefits of monetary union, particularly stability based on low inflation and lower interest rates.