IRELAND will be in the first wave of monetary union, despite fears about currency fluctuation, a leading European bank said yesterday.

But the single currency will cost the banking sector dear, and is likely to provoke a shake out in the industry, a conference in Dublin heard.

As part of its seminar "roadshow", which takes in several European capitals, France's Banque Nationale de Paris (BNP) told a gathering of executives that market doubts over currency fluctuations in the run up to EMU would not prevent Irish entry.

"I don't see this kind of problem for Ireland. The core of the problem is Spain and Italy," said Mr Philippe d'Arvisenet, an economist with the BNP.

German public resistance to Italian participation was likely only to delay the lira's entry by about a year, he added.

He stressed that for the single market to achieve maximum efficiency, it needed as many members as possible to meet the convergence criteria and join.

Despite what he termed Britain's "cultural difficulties" with ceding economic sovereignty, the BNP still believed that sterling would merge with the euro by 2002, Mr d'Arvisenet added.

Mr Tom Woulfe, BNP's Dublin deputy general manager, pointed to the significant increase in bank business when the pound separated from sterling, predicting the reverse effect when EMU begins.

This would see most European foreign exchange transactions vanish, with other niche business also affected, he added.

Mr Woulfe said the BNP expected immediate costs related to the abolition of so many currencies at around $300 million (£187.5 million).