All banks agree they will lose revenue from foreign exchange business as a result of European Monetary Union. The Irish Bankers' Federation (IBF) estimates banks will lose £145 million a year as a result of no longer having their bureau de changes exchanging various European currencies.

In addition, there will be a once-off cost of about £100 million, according to a study produced last year by the ESRI.

Such figures are predicated on sterling being part of the single currency. If sterling stays outside, the costs for the banks are likely to be considerably reduced, perhaps by more than half.

Of course the change to the euro will not affect foreign exchange dealings involving dollars and other currencies not in EMU. At present, about 75 per cent of the bank's foreign exchange business is done in dollars or sterling.

Mr Michael Watson, head of Bank of Ireland's Group EMU unit, says: "There will be a certain loss of revenue, but this is not going to happen all at once."

This view is based on the fact that, although the euro as a note is due to be introduced on January 1st, 2002, there will be a six-month "transition period" when the euro and the various national currencies will co-exist.

"This lessens the impact somewhat," says Mr Watson.

He is not concerned about a frantic rush by people to ditch their national currencies, as their value will be pegged to the euro during this transition period.

Despite this, it is likely that cheques in euros will be available soon after 1999. It may also be possible to make automated payments in euros at this stage.

This will pose challenges for banks, though they say the introduction of actual notes will be the crucial development.

That will happen in the middle of 2002 when the euro is due to replace all currencies signed up to EMU. After this national currencies will no longer be legal tender and the banks will feel the full force of the new regime. The way they respond should prove interesting. Mr Frank Sexton, deputy director-general of the IBF, says banks may look to non-European currencies as a way to make up some lost revenue. Mr Josh Fletcher, manager of personal banking at Allied Irish Banks, says the revenue loss will be high and cites decimalisation as the only similar precedent. He does not see any way for banks to substantially offset the likely revenue loss. On the subject of benefits for customers, all the banks are cautious. "There will be a marginal benefit for customers because of the disappearance of exchange rate risk, but it will be small," says Mr Fletcher.

The increasing popularity of credit card transactions means that bureau de change operations are often by-passed anyway, he points out.

While concerned about the immediate loss of revenue, the banks are comforting themselves in the belief that a single currency will increase the level of economic activity, providing more business for them.

Bank officials will be worried that millions of pounds lost in revenue may impinge on job numbers. Mr Fletcher, speaking on behalf of AIB, says this is unlikely and says re-deployment of personnel is more likely to occur. However, with more bank functions becoming automated, such a move may be difficult.