The State took the latest step towards European Monetary Union when the Minister for Finance, Mr McCreevy, introduced the Central Bank Bill yesterday.

The Bill is a technical measure to bring legislation governing the Central Bank of Ireland into line with certain provisions of the EU Treaty.

Mr McCreevy told the Dail that while EMU rates would become effective on January 1st next, "euro notes and coins will not be introduced into circulation until January 1st, 2002".

Legal tender status "will have been withdrawn from national currencies at the latest by July 1st, 2002", the Minister said.

"The Irish Government's intention is that Ireland joins EMU at an exchange rate that meets the needs of the economy in the fullest sense of the word, and that the decision cannot be finalised until next May," the Minister stressed.

The Governor of the Central Bank will be on the board of the new European Central Bank, which will be an independent institution. "This independence will generate confidence in the euro as a stable and secure currency," the Minister said. "It will also ensure that in deciding issues, the ECB will be guided by the interests of the Community as a whole, rather than being unduly influenced by the views of a particular memberstate."

Mr McCreevy referred to a key concern of many Irish firms about the potential volatility of sterling against the new euro currency. "Irish industry that might be particularly exposed in the event of such an occurrence must prepare appropriately for it," he said.

"Sterling is currently well above what most commentators, including the Bank of England, consider to be its equilibrium level. Therefore, at the present time, sterling would have to fall a very long way before it could be considered to represent an economic shock."

"The challenge presented to us from January 1st, 1999, is to ensure the best return for the economy and for employment from our membership of the euro zone and to deliver on the Government's commitment in its `Action Programme for the Millennium' to share the benefits of Ireland's EMU participation among all sectors of the workforce."

Fine Gael welcomed many of the Bill's provisions. The party's finance spokesman, Mr Michael Noonan, spelled out the position. "The Fine Gael position is clear. We are pro-European, we are proEMU, we support the Bill here and we support entry even though we have some difficulty on the details of the manner in which the Minister is handling the affair."

He added: "It is inevitable that we are going in and 10 other nations are going in from January 1st next year. I think it is absolutely certain that this is now going to happen and people pulling at the coat-tails of the decision-makers at this point are not going to slow the pace."

"That message has got to be got clearly across to both big and small business. If there is anybody thinking that this is some kind of dream from which they'll wake up and they won't have to make either the preparatory arrangements or the structural changes necessary in individual businesses, then they're in a for a very rude awakening indeed."

Labour's finance spokesman, Mr Derek McDowell, warned that EMU "involves the surrender of a great deal of economic sovereignty. We will lose the use of several important instruments currently available to us."

He said: "We would no longer be able to devalue in order to deal with competitor pressures. We will no longer be able to stimulate or reduce demand by altering interest rates. In the past, these instruments have been of con siderable importance in managing our economy."

Mr Pat Rabbitte, Democratic Left's finance spokesman, focused on the rate at which the State would enter EMU. "The rate we strike must take a view of what is the underlying credibility of our economic performance," he said. "The importance of not over-valuing the worth of the Irish pound on entry is evident." He added: "It is likely that the post-1999 situation will see transfers to Ireland stepped down somewhat. It is impossible to know for how long the computer boom will continue but in the medium term, output could drop to more moderate levels.

"So will the present momentum continue? If the boom somewhat abates, will somewhat lower interest rates boost investment? It may be that the benefits of a common currency zone within a huge single market will provide a substitute stimulus for the Irish economy."