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Category: 

Stock_Market

Date: 

1997-09-22 15:26:31

Subject: 

NY Fed President Warns of Major Risk to Markets

Comment: 

This Reuters story is important. In U.S. central banking circles, the President of the NY FED is second only to Alan Greenspan in importance. This is very, very serious.

I have posted his speech in the "Banking" category.

* * * * * * * *

Saturday September 20 8:28 PM EDT

Big financial mkt risk in 2000 date change--NY Fed

NEW YORK, Sept 20 (Reuter) - New York Federal Reserve Bank President William McDonough said the Year 2000 software date change poses a major risk for world financial markets, and, if botched, could hurt the world economy.

``Getting the Year 2000 issue right is critical for every organization. Failure to get it right will affect the integrity of the payments system and the performance of the domestic, and maybe even the global, economy,'' he said in a speech to be delivered before the annual membership meeting of the Institute of International Finance in Hong Kong.

A copy of the speech was made available here.

``... (T)he century date change poses a very significant risk for financial markets.''

The New York Fed chief said that as recently as the early 1990s, banks and other financial institutions did not pay much attention to the Year 2000 issue. Using just two digits in computer programs to represent the year made sense for decades.

However, when the new millennium arrives, operating systems of banks, corporations, brokerage houses and other institutions will read ``00'' in the year-date field, a pair of numbers the systems may only recognize as ``1900.''

To guard against Year-2000 problems, organizations are dedicating significant financial and human resources to ensure their programs and systems are millennium compliant.

In fact, McDonough said consultants estimate that systems testing alone will absorb as much as 70 percent of Year 2000 project resources at some institutions.

Among other things, McDonough stressed that organizations cannot deny that any Year-2000 problem exists or that institutions can address the issue using only existing resources. Similarly, he cautioned firms not to leave the problem to outside suppliers or vendors.

``Bluntly stated, if your own management and staff, or your correspondents and customers, take any of the (above) positions, your organization may be at risk,'' he said.

McDonough said the New York Fed and the general Fed system were working hard to ensure that their systems will be ready and fully tested.


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