EUROPE is on the path to a single currency, the euro, and this is opening up opportunities for investors in Hong Kong, according to those following the latest developments. As the euro comes into being, investors will be able to profit from easier access to Europe's bond markets, smaller charges for converting between European currencies and chances to gain from their realignment. Yves Wagner, chief economist at Banque Generale du Luxembourg, said: 'The move towards the European monetary union is an opportunity, even if some of this opportunity is already over as markets anticipate several years ahead.' Recent events suggest the path towards the euro is now irreversible. In accordance with the timetable laid down in Madrid in December 1995, the European Council will decide in early 1998 which member states are meeting conditions for the move to a single currency. On January 1, 1999, participating countries' exchange rates will be finally fixed among themselves and in relation to the euro. The convergence criteria laid down by the Maastricht Treaty are rules of good management: inflation must be contained and government deficits must be controlled. The exact makeup of the monetary union remains open to question, however. So far, Mr Wagner said, only one country seemed certain to meet all criteria: Luxembourg. But other countries are moving towards satisfying the agreed requirements and it is likely between five and eight countries will have their currencies combined to form the new euro. The most difficult of the criteria to meet remains the debt level, with only four of the potential 15 countries satisfying the current requirements. European bond yields are converging, indicating that investors already see a single currency as likely, at least among several of the core currencies. The spread between the deutschemark 10-year bonds and a theoretical 10-year euro bond has fallen from 88 basis points a year ago to virtually nothing. For investors with an interest in European investments, the path towards the euro will offer a number of chances for gain, particularly in the bond markets. Although gaps are closing across the board, there is still some chance to profit, probably by investing in bonds in countries not likely to be included in the initial batch of entrants into the monetary union. Mr Wagner said this included such countries as Italy, Portugal and Spain. 'You cannot play France today, but you could play Italy,' he said. All the countries had made efforts to trend towards the criteria, and even if they do not reach them in 1998, Mr Wagner said he strongly believed they would be included in monetary union within five years at most. As all of the countries in the European Union are likely to be included eventually, bonds in the weak currencies will gravitate further towards the centre, meaning investors will benefit. He said there could also be gains to be made in the currency that is certain to avoid inclusion in the euro: the Swiss franc. Switzerland is not a member of the European Union. Mr Wagner said the franc was likely to continue to gain favour as an alternative to the euro and the other currency blocks.