Sweden's central bank, the Riksbank, said yesterday that Sweden would probably join Europe's single currency in January 2002, making further preparations for the step imperative.

"Assuming, for the sake of argument, that the political decision-making process does unfold in the course of next year, the most realistic timetable - given the practical preparations - would seem to point to Sweden's participation from January 1st, 2002," the Riksbank governor, Mr Urban Backstrom, said.

"The recent debate (on EMU) has shown how quickly the situation may change. Continued preparations are, therefore, needed to ensure a state of readiness exists when the political system calls for it," he said in a speech.

Mr Backstrom was voicing a now widely-held view on Swedish membership in EMU, triggered in part by a dramatic shift in Swedish public opinion in favour of the step since the euro's smooth new year launch. The Riksbank has made clear for some time it wants Sweden to join, but has no say in the decision.

News earlier this month that the Prime Minister, Mr Goran Persson, wants the governing Social Democrats to decide their position on the single currency early in 2000 has fanned speculation that there will probably be a referendum to decide the issue late the same year.