News Release
Financial Sector Preparations for the Year 2000 - Issue 5
21 July 1999
The Bank of England publishes its fifth report on the financial sector's preparations for the Year 2000 (the "Blue Book") on Wednesday 21 July.
The UK financial sector started its Year 2000 preparations early, and most remediation and testing work is now complete. There is a high level of confidence within the financial sector that it will be "business as usual" through the millennium changeover period
The main focus for all financial sector institutions is now business risk mitigation and contingency planning, with particular emphasis on the arrangements for the millennium weekend. Much work has already been done in this area. The Bank, together with the FSA, is seeking to ensure that the plans are consistent and widely understood.
John Trundle, Head of the Bank's Market Infrastructure Division said:
"It is important the financial sector does not relax in its preparations for the millennium. A huge amount has already been done, which has helped to build informed confidence. But all UK financial institutions are dependent on the preparedness of others, inside and outside the UK financial sector. So the risk mitigation and contingency planning work is also important, as is the need for good communication."
Previous issues of the Blue Book have focussed primarily on the Year 2000 preparations of the UK financial sector. As confidence in the readiness of the UK financial sector has grown, demand for authoritative information on developments outside the UK has increased. To help meet this demand, the Bank is publishing in this Blue Book reports from the central banks of twelve other major financial centres on the Year 2000 preparations in their countries.
This Blue Book also contains a fuller report on the Year 2000 preparations of the major payment card schemes, a strong focus of which has been testing with their members. These preparations are now well advanced, with at least ninety percent of internal and member testing completed by 1 July. The attention of the schemes is now turning to contingency and millennium weekend planning.
Good progress has been made in planning the supply and distribution of banknotes over the millennium period. The Bank has been working for some time to ensure an ample supply of notes, and co-operative planning between the Bank, APACS, the banks, building societies and the Post Office is now well advanced to ensure that this supply is available in the right place at the right time.
The Bank has been discussing market behaviour and plans for liquidity with a range of market participants, both individually and via market associations. Most financial institutions expect the markets to operate as normal through the millennium period, but to be somewhat thinner, as is usual at year-ends. However, they are cautious about the residual risks of system problems, and more particularly of behavioural changes by counterparties, customers or suppliers. The Bank will continue to seek to ensure an adequate supply of sterling liquidity, and it will be particularly alert to this need through the millennium period. The Bank has recently announced an extension to the collateral it will accept in its daily open market operations, so that take-up of liquidity is not constrained by a lack of collateral. The Bank will continue to monitor the market closely, and refine its contingency plans, in order to be able to move quickly should circumstances demand.
This issue of the Blue Book reports the proceedings of the Year 2000 symposium which the Bank and the FSA hosted jointly on 26 May. The symposium was chaired by David Clementi, Deputy Governor for Financial Stability, and was attended by senior managers from major financial firms and trade associations. The symposium focused on global and UK preparations, the impact on financial markets, individual firms' preparations, and contingency planning and millennium weekend preparations.
As in previous issues, this Blue Book reports on the continuing progress of the Year 2000 programmes of the major infrastructure providers to the UK financial sector; their work on remediation and testing is now largely complete. This Blue Book also includes a table showing the current plans of the financial infrastructure providers for opening and closing over the millennium changeover period.
Notes to Editors
- The Bank has sought through its Blue Books to raise awareness of the Year 2000 problem and to share information about the Year 2000 preparations of the financial infrastructure providers. The Bank has also sought to encourage co-operation and the development of best practice within the financial sector.
- The first issue of the Blue Book was published in February 1998. This, and subsequent issues, have given details of the remediation and testing work being undertaken by the providers of payment and settlement systems, clearing and netting services, financial information and telecommunications services. The third issue (October 1998) focussed on the issues surrounding testing. The third and fourth (March 1999) issues gave guidance on the approaches to contingency planning and risk mitigation.
- The Bank intends to publish two more Blue Books, in October and December 1999. These will focus on the contingency and risk mitigation plans of the financial infrastructure providers, and the financial sector's arrangements for the millennium changeover period.
- The central bank reports in this Blue Book cover: Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Singapore, Sweden, Switzerland and the United States.
