Banks brace for Y2k cash rungreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Banks brace for cash run Plans include printing more money, refilling ATMs faster for New Year's November 19, 1999: 4:31 p.m. ET
NEW YORK (Reuters) - U.S. banks are bracing for a run on cash machines by consumers who may try to stockpile money for fear of computers failing and savings accounts vanishing as clocks tick into 2000. Banks are ready to load more money into cash machines and will have fleets of armored trucks on call to deliver sacks of money to branches if coffers are depleted. In a few cases, banks say they will keep doors open if teller lines are long. The preparations stem from concerns that people will empty bank accounts at the end of December, to guard against losing savings in a system breakdown. Computers that read the last two digits of a year have been fixed so they do not confuse "2000" with "1900" next year, but many still fear glitches. The U.S. Federal Reserve has ordered the printing of some extra $50 billion to meet any increased demand for cash across the country. It also has made arrangements to make it easier for banks to get short-term loans to meet credit demands. "We are prepared to put cash into machines more frequently and provide higher denominations of bills," said Jim Schepker, a spokesman for Boston-based bank FleetBoston Financial Corp. (FLT) "If people try to enter a bank branch or use ATMs, we will keep them open as long as there might be lines at any given branch." Many tuck away a month's income
So far, customers appear calm and have not made abnormally high withdrawals from ATMs as the year draws to a close, but many banks say they are scrutinizing ATM transaction volumes daily and preparing for the worst, just in case. Nearly three in five Americans plan to hold additional cash for fear of any Y2K computer bugs, according to a poll for Reuters released on Thursday. Of this group -- equivalent to about 65 million households -- one in five believes it is reasonable to tuck away as much as a month of income or more, the survey showed. But a majority of bank customers who plan to withdraw cash because of Year 2000 concerns said they will take out less than $500, according to another poll released on Thursday for U.S. regulators. The survey also showed customers are increasingly confident about banks' technology preparations now. "Key has had a task force on it for more than a year," said Mike Conway, a spokesman for Cleveland-based bank KeyCorp (KEY). "We've got all our pipelines ready to go. We've got more than 40 percent additional dollars in our pipelines if they are needed, though we don't think they will be. ... We have not noticed any additional spikes at all in terms of cash withdrawals. So far, smooth sailing." Just another long weekend
The banks also have embarked on a campaign to educate consumers -- stuffing brochures into statements and putting up displays in lobbies to tell people to think of the end of the year as a long weekend and withdraw funds accordingly. "What we have advised our customers is that they should prepare as they would for any long holiday weekend," said Ed Shell, director of Y2K cash contingency planning at North Carolina-based regional bank Wachovia Corp. (WB). Republic New York Corp. (RNB), a multinational bank headquartered in New York, is advising its customers to do the same. The bank also plans to have the amount of cash in its system that it would have for a long weekend, plus some extra money, although it has seen no evidence of unusual activity. Midwestern banking giant Bank One Corp. (ONE) said it has been carefully monitoring cash withdrawals across the country, though it has not seen aberrant spikes up compared with this time last year. The bank also has been working with the Federal Reserves in case it needs extra cash. "We do not see any business or retail customers taking out more cash for any reason, including Y2K," said John Russell, a Bank One spokesman. Cash usage is typically about 25 percent higher in the last quarter of the year, and particularly in December, than it is at other times, Russell added.
-- Homer Beanfang (Bats@inbellfry.com), November 19, 1999
Friday November 19 10:22 AM ET
Swiss Make $39 Billion Available for Year End
By Elif Kaban
GENEVA (Reuters) - The Swiss National Bank has shipped out 60 billion Swiss francs ($39 billion) to banks across the country to cope with a possible surge in cash demand on the eve of the millennium, a central bank spokesman said.
The amount is 20 times more than the usual cash demand in Switzerland around the Christmas and New Year's Eve holidays and roughly double the overall volume of banknotes in circulation, said Swiss National Bank spokesman Werner Abegg.
The amount is equal to 9,000 Swiss francs ($5,800) for every individual in Switzerland, a major international financial center with an estimated $2 trillion in wealthy client assets under management.
Financial institutions around the world are bracing for likely pressure on cash machines due to the millennium computer bug problem where an old method of recording dates could disrupt some computers at the end of this year.
Abegg said that Switzerland expected no problems as far as cash demand is concerned.
``All the banknotes have been printed and ready. We have already started distributing them,'' Abegg said. ``We will be very well prepared in case of an increase in cash demand. Everything is meticulously planned. Nobody has any reason to worry.''
By comparison, Swiss demand for banknotes peaks every New Year at the equivalent of three billion Swiss francs ($1.9 billion) or about 10 percent of the cash in circulation.
Bankers said banks were confident of handling any glitches.
Investor fears of financial market turmoil have been easing, reflected in part by low volatility on the options market and plenty of liquidity around.
``We don't see nervous clients. We haven't experienced any clients liquidating portfolios in anticipation of Y2K problems either,'' Jacques Rossier, managing partner at Geneva private bank Darier Hentsch & Cie, told Reuters.
He said many clients however were giving orders not to conduct transactions on their portfolios from around December 20 until around January 4 -- the first value date in the new millennium -- or after.
Like investors, many stock exchanges will be taking a long Christmas holiday. Bankers expect trading to almost dry up in late December, like it did the same time last year ahead of Europe's monetary union.
Rossier said Darier Hentsch, like many other banks, planned to stop trading on financial markets around December 20.
A quick poll of Geneva's private banks found that none had changed asset allocations as a Y2K precaution such as increasing cash holdings although some said they had cut exposure to emerging markets due to fears of possible disruptions.
-- Homer Beanfang (Bats@inbellfry.com), November 19, 1999.
It has been over a week since the first publicized report that banks had finally needed to start tapping into liquidity especially set aside for Y2K withdrawals. What IS it with this Reuters reporter?!
-- (email@example.com), November 19, 1999.
Is something wrong with my calculator? Let's see. Peak demand every New Year is three Billion Swiss francs, which is 10% of currency in circulation. 10 times 3=30B in normal circulation. Now we double amount of banknotes in circulation to a grand total of 60 billion and every individual citizen can withdraw 9000 francs ($5,900).
H'mmm, the Swiss are expecting a far bigger run on currency than the average American. Maybe they know something we don't.
-- Tommy Rogers (Been there@Just a Thought.com), November 19, 1999.
I'm trying to visualize how a responsible leader of the world's most advanced country could have eliminated any possibility of a serious bank run ? Am I just not smart enough to understand the financial situation today ? Is a bank run impossible ? If there is a run, will the results be as problematic as in 1929 ? If I am totally off base about the consequences of a bank run, please, someone let me know. It just seems that the risks are so over-whelming that just ignoring it is either part of the plan or total incompetence.
-- Ken G. (None@thistime.com), November 19, 1999.
I'm curious, too. Since the passbook saving in this country is in the negative numbers (-1.8%, I think), does this mean that everybody has twenty or thirty thousand dollars in their saving accounts?
-- Liz Pavek (firstname.lastname@example.org), November 19, 1999.
Oops. Newbie nerves, I guess! I meant that I wondered if everyone the bankers are worried about remoing funds have twenty or thirty thousand in their CHECKING accounts. Whew!
-- Liz Pavek (email@example.com), November 19, 1999.
"We are prepared to put cash into machines more frequently and provide higher denominations of bills,"
That could be a problem for the ones who wait until the last minute. What are you going to do if the cash machine gives you 100's, but you want to have some smaller bills ready to buy things? Then you go to the bank or a store and they say sorry, we're too low on small bills to break that.
-- Hawk (firstname.lastname@example.org), November 20, 1999.