THE National Treasury Management Agency and capital market brokers will have to intensify their marketing of Irish Government bonds to meet the challenge of the new EMU bond markets, according to the Minister for Finance, Mr Quinn.

The challenge for Ireland in this new bond market would be to position ourselves to achieve maximum benefit, he said, at the European Finance Convention in Dublin yesterday. The Irish Exchequer would benefit through access to a new, bigger and more liquid bond market and because interest rates would be lower inside EMU than outside it, Mr Quinn said.

But the NTMA and capital market brokers would have to step up their marketing of Irish bonds well in advance of the introduction of EMU "so that the widest range of investors become familiar with the Irish market and the Irish economy", he warned.

The main impact of EMU on the European bond markets would be the creation of one big, new single currency bond market from a number of individual national markets. The new market would be highly liquid, would facilitate large investment transactions and would have large and efficient derivatives markets.

The euro bond market could be the second largest in the world - depending on which counties participate, it could initially account for almost a quarter of the total global bond market. Currency risk and related transaction and hedging costs would be removed because the market would operate in one currency.

This would encourage a wider range of cross-border bond investment by both existing and new European investors, according to Mr Quinn. He predicted an increase in the level of institutional fixed income investment in the euro market from the rest of the world.

With no central sovereign bond issuer, Mr Quinn said he expected that one or two "benchmark" issuers would emerge perhaps Germany and/or France".

The elimination of exchange rate risk will mean that differential credit standing and liquidity would become the main determinants of the pricing spread between the benchmark and other bond issues, he suggested.

Mr David Croughan, chief economist at IBEC, told the conference that a major decision facing every company was when it should change over to using the euro. While the notes and coins would not be in circulation until 2002, a lot of companies would be doing financial and inter-company business transactions in euros from 1999 onwards. There would be no compulsion to do so, but many companies were likely to change over for such transactions before 2002 Companies should also address the implications for their software, he said. In relation to sales and marketing. the new price of products would have to be translated into euros. Rounding the price up in euros might lead to losses for the consumer, while rounding down could hit profit margins. A period of dual pricing in national currencies and euros might cause confusion.

"Small companies have very special problems in relation to the practical changeover to the single currency," he warned, as "they lack the finance, either for expensive equipment or consultancy advice". IBEC shortly planned to produce a systematic and easy-to-use checklist to help such companies prepare, he said.