Italy's difficult switchover to the euro encountered another serious problem yesterday when 90 per cent of the country's banks were rendered inoperable by a one-day bank workers' strike.

The dispute, which comes within the ambit of negotiations for the renewal of a national contract for bank employees, was also prompted by worker dissatisfaction at the way Italian banks handled the transfer to the euro. In particular, trade union officials argue that the banks underestimated the problems posed by the new currency and did not hire enough extra staff.

Yesterday's strike had two major consequences. On the one hand, it prompted huge queues at post-offices as people transferred their business there, whilst on the other it led to a run on ATM cash dispensers as people went looking for euro to spend in the traditional post-Christmas sales.

The bank strike was the latest in a series of problems encountered by Italy's switchover to the euro. Use of the new currency has been limited by inefficient distribution, especially since many banks failed to convert cash dispensers ahead of the January 1st changeover.

Furthermore, the introduction of the euro prompted a political upheaval last weekend when pro-European Foreign Minister, Mr Renato Ruggiero, resigned in the wake of a bitter cabinet row.

Mr Ruggiero, a former head of the World Trade Organisation, was called on to resign by Prime Minister Silvio Berlusconi following his public criticism of euro-sceptic cabinet colleagues who had expressed scant enthusiasm for the introduction of the new currency.

Despite the euro's mixed start in Italy, Prime Minister Berlusconi yesterday reaffirmed his government's full commitment not only to the euro but to the process of European integration, saying: "Italy is fully committed to Europe."