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One minor glitch reported by Federal Reserve

The Associated Press 01/04/00 4:22 PM Eastern

WASHINGTON (AP) -- The banking system continued to operate largely free of Y2K glitches on Tuesday, the second New Year's business day, after a problem at a regional Federal Reserve bank was fixed.

Armored trucks around the country, meanwhile, continued to carry back to the regional Fed banks some of the billions of extra dollars distributed to banks, thrifts and credit unions in case of Y2K panic.

Some banks have elected to keep the surplus currency for future use rather than return it, Fed spokesman David Skidmore said. He said the number of banks planning to do so was not immediately available.

The central bank's check-clearing and payments systems "have functioned very smoothly," Skidmore said. He noted one exception, which he described as a Y2K-related "minor glitch" in the electronic system by which banks transfer federal tax payments from businesses and individuals to the U.S. Treasury.

Skidmore said the glitch occurred Monday at the Federal Reserve Bank of Chicago and involved about $700,000 in tax payments from customers of 60 financial institutions in the region, out of a total of some $15 billion processed nationwide that day. It was repaired by Tuesday, he said, adding that the only result is that the affected payments were being posted Tuesday, a day late.

The U.S. Federal Reserve distributed some $80 billion to banks, thrifts and credit unions during the fourth quarter of 1999, compared with $23 billion over the same period a year earlier. But some of the extra currency could have been requested for reasons unrelated to Y2K, such as bank customers' holiday shopping needs, Fed officials say.

Now that 2000 has arrived without a run on banks, the banks and other financial institutions on Monday started packing up the surplus currency and sending it back to regional Federal Reserve banks, as previously planned. The process is expected to take several weeks.

Banking industry officials say they're optimistic people won't experience problems withdrawing cash from automated teller machines.

-- Homer Beanfang (, January 04, 2000

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