Recent statements by the British government make it clear that the UK will not participate in the first wave of European Monetary Union (EMU). In contrast, the Irish government appears totally committed to first-wave membership when Stage III starts on January 1, 1999. This paper is primarily concerned with the economic implications of Irish membership in a scenario which excludes the UK. Given certain assumptions, the issue is whether Ireland should participate in a monetary union which comprises the European core but exclude its one major trading partner. Several characteristics of the Irish economy are focused upon which can be used as indicators of whether participation in EMU could impose significant costs. The major question is whether the loss of policy autonomy generally, and the exchange rate option in particular, increase the cost of adjusting to shocks such as a rapid sterling depreciation or a rise in world oil prices.