If all goes according to plan, European currency volatility may be a thing of the past by the middle of September. Certainly the Irish authorities must be hoping so after the renewed speculative attack on the currency yesterday.

It now appears that the rate at which currencies entering the single currency will be fixed against the euro is likely to be discussed at the informal meeting of EU finance ministers (Ecofin) in Luxembourg this September.

The meeting is likely to be very similar to the informal Ecofin talks in

Dublin last year. The finance ministers of Ecofin will meet on the Friday to iron out an agreement. This will be presented to the heads of government on the

Saturday evening.

The executive directors of the new European central bank are also likely to be nominated at this time. So far it looks as if Germany will have one director,

France another, the Italians another, while one space may be kept for the

British.

Ireland is likely to have an arrangement with the Austrians and the Finns to share a directorship.

The view up to now, predominantly led by the French, has been to use central rates to convert from participating currencies to the euro - this still looks the most likely outcome. Although Ireland may be able to negotiate some sort of an opt-out, or flexibility, perhaps along the lines that the ESRI's Patrick

Honohan has described (see page 3).

While it now looks likely that the methodology and the timing will be discussed in Luxembourg in September, no formal announcement of which countries are participating will be made until the May 1998 Ecofin meeting.

That meeting should technically be held in Britain, which will hold the presidency at that stage. But so far, even the Commission has no idea where it will end up. This is another possible reason why the decision may be taken this

September, before the British take over the presidency.

While the discussion has not been formally pencilled in for September, informal discussions have tended to the view that "the earlier the better" in terms of making the key decisions. Many finance ministers are said to be of the view that the longer they leave it, the more turbulence there will be on the currency markets.

Whether or not this proves to be the case is a moot point. From Ireland's point of view it is probably best if we win some flexibility. If not, a later decision, when we have more information on sterling's direction, would probably make sense.

Another consequence of the September meeting is that future interest rate rises are looking unlikely, at least if the current speculation does not prompt one in the meantime. It is understood that the former Minister for Finance, Mr

Quinn, strongly resisted the previous rise on which the management of the

Central Bank insisted.

Eventually they came to a compromise that a quarter point rise would be announced at the same time as the credit figures were released. In the event, the Bank left a half-hour gap between the two announcements. However, by the next week inflation figures were out which proved that the Minister and the

Department were correct that inflationary pressures remained subdued. As a result, it is likely that the new Minister for Finance, Mr McCreevy, will have been under little pressure for a rate rise, although that may now change.

In addition, the Department has admitted publicly that rates will be falling in the run-up to monetary union. A rise now, which would be viewed as temporary, would be likely to have little impact. It would also steepen the trajectory by which the currency would fall in the run up to January 1st, 1999.

Revaluation must also be looking unlikely. In April and May most of the pressure for a revaluation of the pound came from Bundesbank chief Hans

Tietmeyer. However, there is greater recognition now that with the French franc at the bottom of the band, it is the French authorities which face many of the problems. In such circumstances, Mr McCreevy is likely to be loath to bail them out at the expense of Irish farmers and exporters.