Fed says U.S. banks readier for Y2K than othersgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
WASHINGTON, July 29 (Reuters)
U.S. financial institutions are better prepared for potential computer problems as the year 2000 approaches than are foreign firms, Federal Reserve Governor Roger Ferguson said on Wednesday.
In remarks to a conference on Year 2000 readiness at George Washington University, Ferguson said he was ``increasingly confident that generally normal operations will prevail in this country's financial institutions during the century date change.''
Ferguson said he was ``less certain (but) not fearful'' about other countries' state of readiness.
In any case, Ferguson insisted that potential millennium date change problems -- which some fear could unsettle global financial markets -- were unlikely to have an impact on the U.S. central bank's interest rate strategy.
``Monetary policy decisions are to be focused on longer-term issues, on whether or not the economy is at the maximum sustainable rate of growth or not,'' Ferguson told reporters after his speech.
``I would continue to focus at the year-end, as we do now, on longer-term issues,'' he added.
The concern is that computers programmed to recognize only the final two digits of a year may cease operating or create errors if cannot recognize ``00'' as a new year.
Ferguson told the conference that recent testing showed that 98.3 percent of U.S. banks and other institutions whose deposits were government-insured had made programming changes to guarantee a smooth start to the millennium.
As a result, the processing systems needed to handle methods of payments from ATM machines to debit and credit cards, electronic payments, checks and even cash transfers will operate normally after Dec. 31, 1999, Ferguson said.
Since the millennium begins during a long holiday weekend and since many Americans may want to have extra cash on hand, the Fed has built up its inventory of cash to meet every conceivable demand, Ferguson said.
``Given the high expectation that all normal payment methods will work, we do not expect that there will be any unusual demand for cash, but if there is, we will be ready for it,'' Ferguson added.
He said ``some glitches'' were almost certain but they should be small and quickly solved.
Ferguson said ``emerging market countries'' should step up contingency planning in the remaining five months to 2000 and disclose what remedial moves they were making. He added that investors ``should look for and make those disclosures part of their decision making.''
-- Mild Mannered Reporter (email@example.com), July 30, 1999
Clark, Clark, Clark! There is no such word as readier. Thanks for the article, though.
-- (firstname.lastname@example.org), July 30, 1999.
I posted a previous thread that said only 22% of the rest of the banks world-wide were anywhere near ready (and take that with a pich of salt...) - in other words the whole banking system is TOAST.
We've run out of time - as Alan Greenspan himself said last year "the banking system must be 100% compliant, 99% will not cut it" [I'm paraphrasing here]
See previous threads in the banking archives.
-- Andy (2000EOD@prodigy.net), July 30, 1999.
Mild Mannered Reporter appeared very briefly on this forum for the first time about a month ago, and now he's back. Here's the link to a thread he started last time:
"Don't take the money and run" says FDIC
-- Linkmeister (email@example.com), July 30, 1999.
Andy, you are 100% on the mark there. SWIFT, the transactions system for international banking operations (where the beef is BTW) is not compliant yet and only 22% of stakeholders participated in a pre- liminary, practically useless test about a month ago.
Furthermore, Mr. Ferguson is either LYING or stating something absolutely wrong. IMHO I would tend to believe he is LYING because no one in his position can afford to be so ignorant for more than a couple of minutes. After that he would be sacked.
What prompts my comments is that Mr. Ferguson said that "the Fed has built up enough inventory of cash to meet every conceivable cash demand". At the very least Mr. Ferguson is ignoring FOREIGN cash demand, as the US dollar today is the de facto 'store of value' currency world-wide.
This matter was exhaustively discussed and debated on the "BANK RUNS, the 'mother' of all y2k debates". Please find it under "Banking and Finances" archive category.
-- George (firstname.lastname@example.org), July 30, 1999.
The posting style reminds me of Sista' in da Hood.
-- Dave (email@example.com), July 30, 1999.
Mr. Ferguson is LYING when he says "the Fed has built up its inventory of cash to meet every conceivable demand..." He's simply trying his best to stick a finger in the leaking Y2K dyke. Unfortunately, lying is in these days, it seems...
The global banking system is just that: a SYSTEM. If all parts of it don't work properly, there will disruptions in this system. The fewer foreign institutions there are which are ready for Y2K, the more disruptions to the system. Assuredly, 22% isn't anywhere near what is needed to keep the global financial system functioning.
-- Nabi Davidson (firstname.lastname@example.org), July 30, 1999.
This thread has been brought to you as a public service of The Rendon Group....
-- Carl (email@example.com), July 30, 1999.
So, Nabi, are you saying that the BIS will allow noncompliant institutions to use the system after the institution testing deadline? Are you agreeing with George that the SWIFT system is not compliant today?
These are not challenges. I remember you stating your background and I'm surprised (and worried) at your response. Private emails accepted. I have PGP.
-- PNG (Peter Gauthier) (firstname.lastname@example.org), July 30, 1999.
"BIS will allow noncompliant institutions to use the system after the institution testing deadline?"
the Catch 22 is...
If they *DON'T* allow the non-compliant banks to participate in "the international banking system of systems" at rollover then by default YOU NO LONGER HAVE A BANKING SYSTEM.
Imported data is the crux here, corrupt data cannot be totally filtered out, a percentage will get through and cause further corruption to compliant and non-compliant entities alike.
The ONLY way to filter out corrupt data is to ISOLATE compliant banks so that they ONLY talk to each other - as is now abundantly apparent this is a non-starter because...
1. No one will grasp the nettle here
2. There are not ENOUGH compliant banks worldwide to ensure the continuity of the system.
-- Andy (2000EOD@prodigy.net), July 30, 1999.
Thanks Andy, but I was asking Nabi because of his position and contacts in the financial industry.
I believe you're a programmer, right? One who has been writing two-digit dates into programs for the last 10 years?
-- PNG (Peter Gauthier) (email@example.com), July 31, 1999.
Never coded date parameters, have certainly cleaned up soggy Assembler date-related code though :)
-- Andy (2000EOD@prodigy.net), July 31, 1999.