Buba's Meister: Y2k Problems Mostly Psychologica

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Buba's Meister: Y2k Problems Mostly Psychological

Updated 8:47 AM ET September 30, 1999

FRANKFURT, Germany (Reuters) - Bundesbank council member Edgar Meister on Thursday said that the greatest risks posed by the Y2K problem were psychological, now that the financial sector has completed a large number of tests and preparations.

To help reassure the German public, the Bundesbank has enough cash reserves on-hand so that every German resident could withdraw an additional 3,000 marks around the end of the year, Meister said.

"The remaining risk concerning the changeover into the year 2000 is in my opinion mostly psychological in nature," Meister said in the text of a speech.

"Cash reserves at the Bundesbank now exceed the amount of cash currently in circulation," he said.

He said financial institutions should not fear that the European Central Bank is unprepared for potential Y2K problems, Meister said.

"Neither are there any liquidity bottlenecks to be expected in the refinancing facilities of the European Central Bank, due to the high reserves held in collateral that are available to German financial institutions," he said.

The millennium bug or Y2K problem is a programming glitch which makes older computers read only two digits of a date instead of four and can make some systems read 2000 as 1900 or to freeze, creating disruptions to an array of computer systems.

Banks and public officials have expressed concern that public fear of the millennium transition could affect banks' liquidity as customers withdraw extra cash before year-end in fear of being unable to access their accounts.

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Ray

-- Ray (ray@totacc.com), September 30, 1999


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