International Y2K Financial Fears

[Bob Olsen <bobolsen@tao.ca>]

From: Richard.Stapells@bmo.com
To: INTERNET-BOBOLSEN * <bobolsen@tao.ca>
Subject: Y2K Survey Raises Fears About Poor Count
Date: Fri, 5 Feb 1999 15:02:16 -0600


Y2K Survey Raises Fears About Poor Countries
By CAROL POWER
American Banker
Issue: Vol. 164  Page 1, February 5, 1999

http://www.americanbanker.com/cgi-bin/read_freestory?990205TECH006


An international coalition of 250 financial institutions, formed last
year to monitor progress toward resolving year-2000 computer problems
and minimize financial market risks, has decided that full disclosure
may do more harm than good.

The Global 2000 Coordinating Group, a voluntary body that grew out of
the Bank for International Settlements' Year-2000 Roundtable, had
planned to publish results from months of research on how prepared
countries are for the next calendar change.

So many countries - mainly in the developing world-are deficient that
the coalition decided against posting that information on the Internet
this week, as scheduled.

There is concern not only about the much-discussed programming
glitches, but also about capital flight from countries suffering
adverse publicity, with the potential for global economic
consequences. Regulatory officials "began to fear the group could
cause significant market impact by publishing its findings," said
Clint Swift, managing director of operations and technology at the
Bank Administration Institute of Chicago.

"For example, if a country in South America or Asia were having a
problem, there could be a credit flight out of that country."
The coalition - comprised of banks, securities firms, and insurance
companies - wanted to publish its findings as a way to prod the lagging
countries to improve. After a meeting last week in London, the coalition
decided instead to put out several recommendations:

* Financial firms should redouble efforts to disclose their state of
readiness, using Global 2000's self-assessment template.

* Securities exchanges, payment networks, and clearing systems should
announce the dates and operational details of their external testing
plans.

* Governments should provide more detailed public disclosures of
information regarding the readiness of sectors that are critical to
the safe functioning of the financial industry.

* Governments and regulators should disclose as soon as possible the
schedule for public holidays that will apply in their countries during
the New Year's Day 2000 weekend.

The group plans to make its survey results available to the United
Nations, the Global 2000 group's steering committee members, and
public-sector officials in each country.

A hint about the findings came out last month during the Bank
Administration Institute Y2K Summit in Orlando.

Citing a report from year-2000 authority Peter de Jager, an author and
president of De Jager & Co., James R. Devlin told the meeting that the
United States, Canada, United Kingdom, Australia, and New Zealand are
the leaders. Mr. Devlin is vice president of corporate technology at
Citigroup and the U.S. banking liaison to Global 2000.

Trailing, according to a United Nations document cited by Mr. Devlin,
are Russia, India, China, Eastern Europe, and South America.

Gartner Group estimated as of the third quarter of 1998 that 15% of
companies in Australia, Belgium, Bermuda, Canada, Denmark, Holland,
Ireland, Israel, Switzerland, Sweden, United Kingdom, and United
States would have at least one mission-critical system failure.

That failure percentage is expected to be much higher in the emerging
markets.

In general, transportation systems and utility companies have little
information on where they stand, Mr. Devlin said. In contrast, "the
financial services sector is in good shape, and there is more
information coming from the telecommunications providers around the
world."

Over all, governments around the world need to become more involved in
the conversion effort, Mr. Devlin said. "The United States government
has made sure that everyone is at the same place at the same time.
Only six to 10 governments outside of the United States have done
that," he said.

The Global 2000 Coordinating Group now is focusing on the readiness of
third parties such as clearing systems, exchanges, and utility
companies. The group is urging all companies to fill out a
quantitative progress assessment and qualitative chart.

"If we all fill out the same chart, we'll get consistency," Mr. Devlin
said. "The message is, don't give up and don't write anyone off. We're
all in this together."

Copyright c 1999 American Banker, Inc. All Rights Reserved.
http://www.americanbanker.com

ABviaNewsEDGE
:ISSUE:  Vol. 164, #24
:PAGE: 1
Copyright (c) 1999 American Banker / Bond Buyer
Received by NewsEDGE/LAN: 2/4/99 8:08 PM



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   Bob Olsen, Toronto            bobolsen@tao.ca
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