INTERESTING! The BIS is one of the most important banking institutions worldwide - so it pays to listen
'The potential effects of a failing of the telecommunications or electric power infrastructure
would have far-reaching consequences for global business.
' BANK FOR INTERNATIONAL SETTLEMENTS, CH-4002 BASLE
Press Communiqu‚
9th April 1998
Global Round Table on the Year 2000
On 8th April the Bank for International Settlements hosted a Round Table on the Year 2000, jointly
sponsored by the Basle Committee on Banking Supervision (Basle Committee), the Committee on
Payment and Settlement Systems (CPSS), the International Association of Insurance Supervisors (IAIS)
and the International Organization of Securities Commissions (IOSCO). The meeting was attended by
more than 200 senior executives (from 52 countries) representing a variety of public and private sector
organisations in the financial, information technology, telecommunications and business communities
around the world.
In 1997, the sponsoring organisations each took initiatives to raise awareness of the issues surrounding the
century date change, enhance disclosure and prompt appropriate action within the financial industry. The
sponsors' decision to organise the Round Table was motivated by their recognition of the seriousness of
the challenges posed by the century date change in IT applications and of the potentially severe
consequences in the financial markets associated with a lack of Year 2000 readiness. The discussions at
the conference focused on the increasing challenges presented by the century date change, with specific
emphasis on the identification of initiatives that need to be taken in order to ensure that financial market
participants and the interconnected infrastructures around the world can continue to function without
major disruptions during the transition to the new millennium.
The discussions at the Round Table confirmed that the Year 2000 issue needs to remain a top priority of
senior management and emphasised that private and public sector bodies should coordinate their focus on
a number of important issues and approaches. These include the continuing need to ensure strengthening
and widening of external testing programmes, improving information sharing among market participants
and their vendors and service providers, fostering increased disclosure by financial and non-financial
corporations of their Year 2000 readiness and testing results, establishing market conventions and
procedures for dealing with potential contingencies, and reinforcing the role of oversight bodies such as
supervisors and auditors. The importance of thorough testing, both internally and with counterparties, was
emphasised as the most effective way to ensure that problems are minimised.
Sponsors' recommendations
1.Awareness of the seriousness and scope of the problem is high but varies considerably across
markets and institutions worldwide. The sponsors believe that it is imperative that all market
participants, and especially financial market supervisors, work to ensure that Year 2000
preparations receive the maximum senior management attention and priority, including at the board
of directors level. In particular, market participants from regions that have not yet vigorously
tackled the problem should consider the need to invest significant resources in the short time that
remains.
2.Testing for Year 2000 readiness is the most critical and complex issue facing the financial industry.
Because widespread testing has not yet begun, the extent of the problems and the amount of
remediation work that remains is unclear. The sponsoring organisations urge market participants to
explore ways to enhance the transparency of testing results.
3.The sponsors consider it critical that financial market supervisors around the world implement
programmes that enable them to assess the Year 2000 readiness of the organisations and market
infrastructures that they supervise. Further, it is important for supervisors to ensure that the risks
related to the century date change are identified, properly communicated among market
participants and appropriately managed in their jurisdiction.
4.The sponsoring organisations agree that the highest possible priority should be given to Year 2000
preparations by telecommunications and electricity providers in each national jurisdiction. Failure of
these organisations to prepare adequately and share information on their plans in order to promote
effective testing could lead to serious disruptions in the world's financial markets.
5.In order to achieve a greater degree of market transparency, the sponsors believe that the sharing
of critical information on Year 2000 readiness by all market participants is essential. The sponsors
encourage private sector efforts to develop standard questionnaires and frameworks for Year 2000
disclosure as these have the potential to provide clear means for measuring progress.
6.Financial industry conventions and dispute resolution procedures should be developed to address
the possibility of transaction failures. Additionally, contingency measures should be considered for
the potential failure of key parts of the financial market infrastructure. Further, it is recognised that
national payment systems need to coordinate testing schedules in order to provide opportunities for
end-to-end testing on a domestic and international basis. The Round Table sponsors welcome and
support the initiatives taken by various industry groupings in this respect.
Joint Year 2000 Council
While the sponsoring organisations can raise awareness of the Year 2000 issue, only the private sector
can assure that applications are ready and thoroughly tested internally and externally and on an
international basis. To this end, several private sector initiatives fostering international coordination and
cooperation were identified during the forum. To maintain a high level of attention within the supervisory
community and to support and encourage these private sector efforts, the sponsoring organisations are
forming a Joint Year 2000 Council comprised of senior members of each committee.
Attached to this communiqu‚ are further details on the discussions and conclusions of the Round Table.
The BIS Web site (www.bis.org) contains further information on the Round Table and will be used to
provide ongoing information on the activities of the sponsoring organisations and of the Joint Year 2000
Council.
DETAILS ON THE DISCUSSIONS AND CONCLUSIONS OF THE YEAR 2000 ROUND
TABLE
Key issues raised at the Round Table
The presentations and discussions at the Round Table confirmed that the complexity of the issues
associated with the Year 2000 cannot be overestimated. Moreover, every senior political and business
executive should have realised by now that the issues pose a critical management challenge and have
potentially severe consequences for the ability of business entities to continue operating through the
transition to the new millennium. The many challenges include the need to address resource constraints,
the need to share information on readiness (not withstanding legal issues), the coordination of testing
schemes within and across markets, the heightened disclosure of vital information, the development of
market conventions to deal with transaction failures and contingency planning for infrastructure problems.
Discussions at the Round Table confirmed that the Year 2000 challenge continues to require the
unwavering attention of senior executives in institutions throughout the world. Organisations need to
ensure that appropriate programmes have been established to address all the various readiness issues that
can be expected to affect their business. The resource constraints (financial, human and technological)
and the amount of time needed to remediate and test internal systems are compounded by the need to
evaluate readiness and arrange for testing with counterparties and customers, payment, clearance and
settlement systems, and various trading and information systems.
It is obvious that no individual IT user, individual institution, sector, market, or country is immune to the
difficult issues presented by the Year 2000 problem. Even if an institution has verified and tested all its
internally developed systems and applications, it will be affected by: the state of readiness of its vendors
and third-party service providers; the public utilities upon which it relies, particularly the
telecommunications and electricity suppliers; the infrastructures that it relies upon for its trading, payment
and external information needs; and the counterparties and customers upon which its business viability
rests. Moreover, the globalisation of financial and economic activity and the widespread use of
information and telecommunications technology throughout the world has created various international
interconnections and global interdependencies which add greatly to the complexity of the challenge.
Particular areas requiring further attention
The discussions at the Round Table emphasised that while only the private sector can solve Year 2000
problems, public sector coordination is necessary to facilitate domestic and global activities. Such
coordination is particularly helpful in designing external testing programmes, improving information sharing
among market participants and their vendors and service providers, fostering increased disclosure by
financial and non-financial corporations of their Year 2000 readiness and testing results, establishing
market conventions and procedures for dealing with potential contingencies, and reinforcing the role of
oversight bodies such as supervisors and auditors.
Testing for Year 2000 readiness may be the most critical and complex issue facing the financial industry
in its effort to ensure that the various interrelated systems continue to function through the transition to
2000. Because widespread testing has not yet begun, the degree of uncertainty regarding the scale of the
problems that will arise and the remediation work that remains to be accomplished is considerable.
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