In the case of banks, for example, it is important for correspondent and custodial customers to develop comfort that the bank will be able to function normally in the new century. Banks and other firms need to develop strategies for conveying appropriate information efficiently to these constituents. In response to a flood of Year 2000 questionnaires from their customers, some banks in New York are beginning to hold forums to convey information and build confidence that they are addressing the problem. Another practice we are seeing is organizations declining to fill out questionnaires regarding their Year 2000 readiness unless the firm asking the questions discloses the same information. It is clear to me that this sort of market discipline is going to become a powerful force in the coming months for firms that are perceived to be lagging and failing to disclose. A solid program of self-disclosure is the best available approach to ensuring that all parties are willing to share information. Of course, supervisors and regulators may also need to develop mandatory disclosure programs or to interpret existing disclosure requirements to cover Year 2000-related issues. In the United States, the Securities and Exchange Commission has progressively strengthened its efforts to require meaningful disclosure by all types of firms. Clearly, supervisors considering increased transparency need to act rapidly to ensure that any new requirements will become effective in time to be useful to market participants. An important challenge in considering either voluntary or mandatory disclosure is the question of what information should be disclosed.
More recently, on the Basle Supervisors’ Committee, I have been learning about the Year 2000 issues that confront bank supervisors around the globe. Scope Simply put, I do not think it would be possible to overstate the importance of the Year 2000 problem as an issue for the financial markets. Naturally, the tendency in these turbulent times is to focus on day-to-day concerns, and to leave future problems to be dealt with later. This tendency must be resisted strongly if we are to succeed in addressing the Year 2000 problem. I say this because the Year 2000 problem is an issue for every country, firm, organization, government agency, bank and piece of critical infrastructure in the world. If the Year 2000 problems that exist within software programs and embedded computer chips are not repaired by January 1, 2000, the affected systems will cease to function or will malfunction. Those firms that have checked for Year 2000 problems overwhelmingly have found that their systems were affected and would not have functioned normally in the Year 2000 without being fixed. Moreover, the efforts of firms around the world have demonstrated that while the extent of the Year 2000 problem varies, no country or sector is immune from it or can afford to ignore its impact. Financial sector organizations such as banks, securities firms and insurance companies are typically among the most highly affected organizations. National and local government systems and services are affected.