Joint Year 2000 Council's Round Table meeting indicates progress on readiness and contingency planning in financial markets
1 July 1999
The Joint Year 2000 Council, together with its four parent committees, today held a meeting of public and private sector representatives of the world's banking, securities and insurance industries. The principal objectives of the meeting were to review progress made in achieving readiness of the core components of the world's financial market infrastructure and discuss risk mitigation strategies and contingency planning necessary to minimise uncertainties and disturbances in financial markets during the transition to 2000.
Roger W Ferguson Jr, Chairman of the Council, stated: "The productive exchanges today between senior representatives of major public and private financial sector organisations made clear the significant progress on readiness being made in financial markets. The discussions also highlighted ongoing work towards the development of appropriate risk mitigation and contingency arrangements that will help minimise the impact of any changeover problems. However, the meeting also indicated that much work is still to be accomplished; therefore, we will need to remain focused in our efforts and avoid complacency."
The Council was pleased that assessments of sectoral and country readiness and the review of the results of recent testing schemes provided evidence that the infrastructure components of the world's core financial systems were continuing to make good progress in being prepared to function properly through the changeover. Further, the recent increase in the level of overall customer testing with the S.W.I.F.T. system was encouraging. However, participation in S.W.I.F.T.'s mandatory test programme, while increasing, remains relatively low. Given the criticality of uninterrupted transmission of S.W.I.F.T. messages, the Council urges national supervisors to consider incorporating reviews of whether market participants have successfully tested with S.W.I.F.T. into their supervisory programme.
Meeting participants also reviewed the potential for financial market disturbances and discussed a range of innovative solutions that are being developed to ensure a smooth transition. A broad-based dialogue on the issue included the discussion of a number of options presented by the Global 2000 Co-ordinating Group, an informal private sector grouping of global financial firms. With regard to these options, which covered a variety of issues such as market contingency planning, funding and collateral management and event management structures, Mr Ferguson stated: "The issues outlined by Global 2000 offer a great deal of insight into the topics to be addressed during the remainder of the year. The Council encourages private sector firms and market authorities in each national market to review the issues and options put forward by the private sector today to determine their applicability to the needs of each local market. The Council, its parent committees and national authorities are already engaged in addressing a number of the issues raised by Global 2000."
The Council expects that communication to the general public of meaningful progress being made and the maintenance of public confidence to be especially critical over the coming months. Mr Ferguson emphasised: "Given that the efficient functioning of the financial markets relies heavily on public confidence, financial authorities and market participants should continue to take steps to enhance information sharing in their markets and to encourage the media to fulfil their special obligation to engage in balanced and accurate reporting." In the interests of ensuring that communication among and between the public and private sectors is as detailed and transparent as possible during the transition period, the Council believes that the public and private sectors will need to focus on the refinement of efficient information exchange mechanisms.
With a view to reinforcing worldwide attention to the important issues raised today, the Council plans during September and October to organise a second round of regional meetings of market authorities in the five major regions of the world.
Background: Since its establishment in April 1998, the Joint Year 2000 Council has undertaken a number of initiatives aimed at raising awareness of the Year 2000 problem and prompting appropriate action within the financial sector's global regulatory community. The Council's activities have included: the development of guidance on a number of policy issues such as testing, information sharing and contingency planning; the establishment of a global database of key Year 2000 contacts; the organisation of regional meetings; and the distribution of a regular newsletter to financial market authorities worldwide. The Council is jointly sponsored by the Basel Committee on Banking Supervision, the Committee on Payment and Settlement Systems, the International Association of Insurance Supervisors and the International Organization of Securities Commissions. Council publications are available on its website (www.bis.org).