The National Treasury Management Agency has been meeting representatives of other smaller countries' bond markets in a bid to boost turnover in the various markets, despite reported opposition from the European Commission.

Representatives of the Irish, Portuguese, Dutch, Finnish, Belgium , Danish, Austrian and Swedish bond markets met in Vienna yesterday to discuss falling turnover in the various markets.

All the smaller euro-zone countries have experienced serious declines in turnover since the advent of the euro, with only the German market receiving a large fillip. Turnover in Dublin is down around 30 per cent, while turnover in other countries is down 50 per cent.

The bond market is based on the buying and selling of government debt. But the advent of the single currency has diminished the attractiveness of one countries' bonds over. Buyers, in this event, have opted for the biggest bond market and safest option - Germany.

Only Sweden and Denmark, which are still outside the zone, still have turnover around the same levels as in 1998.

According to a source, the Commission was displeased that a caucus group of the peripheral countries was emerging but nonetheless the meeting went ahead.

Some of the countries are hoping that turnover will improve in the new year. Because of the Y2K problem, many treasuries have given traders instructions to reduce trading volumes coming up to the end of the year and some believe that it may pick up again afterwards.

The low turnover in the bond market is bad news for the stockbrokers but it could also cause problems for the individual countries. At the moment, with the Exchequer coffers overflowing, there is little reason for the Government to be issuing much debt. But when that turns around, it could find it very difficult.