Federal Reserve Board member Edward Kelley, Jr., has the dubious assignment of being the FED's spokesman on y2k. In recent testimony, he warned about the consequences of banks' failing to become compliant.
He is concerned about the possibility that the problem might become "systemic." That is a very scary word. It is the heart of the problem for banking.
The FED can regulate banks doing business inside the United States. It can do nothing except advise foreign banks. He admits that some foreign banks are not taking steps to solve the problem.
I'd like to know: How many? How big are they? And how can the FED keep them from interacting with compliant U.S. banks (none yet) without causing a breakdown in the international banking system?
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``The stakes are enormous, actually, nothing less than the preservation of a safe and sound financial system that can continue to operate in an orderly manner when the clock rolls over at midnight on New Year's Eve and the millennium arrives on the scene,'' Kelley told the Florida International Bankers Association in Miami. . . .
Kelley said the U.S. central bank was concerned about both domestic banks and foreign banks operating in the United States if computer systems are not corrected and tested well ahead.
``Operating problems at individual banks must not be allowed to spread and become systemic,'' Kelley said, possibly making banks unable to meet their obligations. . . .
Kelley said the Fed was talking to bankers and regulators from around the world that have U.S. operations and was concerned that some were not taking the steps necessary to be ready for Year 2000.