The euro fell below 91 US cents yesterday after the European Central Bank (ECB) left interest rates unchanged at 4.75 per cent. The ECB's governing council, which discussed rates in a telephone conference, gave no explanation for its decision.

In an effort to smooth the changeover to euro notes and coins, the central bankers approved a 10 per cent increase in the production of euro banknotes.

Under the original plan, about 14.25 billion euro banknotes were due to be prepared to enter into circulation on January 1st, 2002.

"We want to be on the safe side. The launch is not at all at risk and it's clear there will be enough notes and coins in circulation," an ECB spokesman said.

The ECB said that euro-zone central banks had been investigating a quality problem in one batch of euro banknotes.

"Tests are under way to establish the precise nature of the deterioration in quality," the ECB said.

The central bankers also discussed an EU report on proposals to reform financial services oversight and said they had conveyed their views to EU finance ministers.

"In general, the governing council considers the final report as a satisfactory outcome that should be able to lead to a more harmonised and flexible regulatory framework in the securities field," it said.

The ECB president, Mr Wim Duisenberg, has expressed concern that some EU member-states, including the Republic, are planning to reduce the role of central banks in regulating financial services.