By now, all major financial institutions should have identified what needs to be done and be in, or near, the final stages of developing detailed plans. Work on changing all applications identified as high business priorities also should be well under way. In the United States, most large institutions plan to have their major applications available for external testing around the middle of 1998, with an expectation that testing with other major institutions would largely be completed by year-end 1998. This schedule allows all of 1999 for end-to-end testing on an industry-wide basis. But even with two years to spare, it is safe to say that no organization will be able to cope successfully with the Year 2000 challenge unless both its management and staff realistically measure its scope and commit to its solution. Bluntly stated, if your own management and staff, or your correspondents and customers, take any of the following positions, your organization may be at risk: • Denial -- the Year 2000 is not an issue for our organization. It is. • No resource problems -- our organization can handle the Year 2000 with its existing resources and within current information technology budgets. Very unlikely. BIS Review 87/1997  -4-  • Vendors will address the issue -- our outside vendors and service providers won’t let us down. Trust is not a substitute for testing. • Covered by contract -- our lawyers have determined that we are appropriately protected by our legal agreements.
Mr. McDonough considers the challenge presented by the Year 2000 problem Remarks by the President of the Federal Reserve Bank of New York, Mr. William J. McDonough before the Annual Membership Meeting of the Institute of International Finance in Hong Kong on 21/9/97. I am pleased to be able to share my thoughts with you today on an issue that is sure to challenge every one of our organizations for the next several years -- the Year 2000 and how the century date change poses a very significant risk for financial markets. As I look at the membership of the Institute of International Finance gathered here in Hong Kong, I cannot help but be impressed as to how truly global financial markets have become. Realizing that this meeting is being hosted here in Hong Kong, with the People’s Republic of China as the host country, further underscores how rapidly the world is changing and how interdependent we are. As a central banker, I worry a lot about events that could disrupt financial markets. Many of the events that I worry about are hypothetical. In those cases, a large part of my job is to convince others that the hypothetical event in question is sufficiently possible that it is in the industry’s best interest to work together to try to avoid the event and related problems. Today, I am sure that I do not have to convince you about the inevitability of the approaching century date change. It is a certainty.