Remember this from January ....
"The boring story is that it [Euro conversion] worked the way it was supposed to," Farrow [director general of the London Investment Banking Association] says.
Of course, Europe was well-prepared for the euro because banks -- perhaps the most well-heeled, well-prepared industry in any region ...
The relief of getting through the first stage is making some people reconsider all the dire predictions for Y2K: If one complex computing exercise can be completed successfully with so few hiccups, perhaps another can be.
wired.com
January 13, 1999
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FOUR MONTHS LATER
EURO LAUNCH TOOK BRITISH BANKING TO BRINK OF CHAOS
Scramble for billions during two weeks of trading gridlock - May 14, 1999
Britain's banking system repeatedly came within hours of gridlock when the euro began trading at the start of the year, senior industry sources have revealed belatedly. Chaos threatened to engulf the payments systems between Europe's banks and only the deployment of emergency plans devised by a group of more than 30 of the region's largest banks - known as the Heathrow Group, after the London airport location used for meetings - ensured that problems remained largely under control.
The existence of 20 different payments systems meant money being transferred from one country to another often ended up in the wrong place. That meant the receiving bank might have been short of funds to pay other debts and any hint of default would be regarded as disastrous.
At the time the euro was launched, the investment bank Warburg Dillon Read warned that at least one European institution had made the same payment five times over, totalling £400m.
Congestion in the system also meant some banks received huge inflows of funds last thing in the day and were unable to invest them in the interbank market so that large interest payments were lost. It forced many banks to borrow, expensively, billions of euros which are not usually necessary. This unprecedented scale of overnight borrowing lasted for more than two weeks.
Money did not go missing, one senior source said: 'The system was never out of balance in terms of total liquidity - it was just that it wasn't quite where it should have been.' ...
newsunlimited.co.uk
THE GUARDIAN
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GLITCH CAUSES 4 BILLION EURO OVERDRAFT April 12, 1999
MUNICH (IDG) -- Although the January switch to the single European currency was smooth at most European banks, a prominent German discount bank and its customers this week were acutely aware that not all possible euro-caused glitches have been found... Customers of Bank 24, a discount bank owned by Deutsche Bank AG, were astonished Tuesday evening to find that their securities accounts appeared to be overdrawn to the tune of 4 billion euro ($4.32 billion). An oversight connected to the change to the euro was responsible for an error this week, which affected 55,000 customers...
cnn.com
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EUROPEAN BANKS LOST TRACK OF BILLIONS OF GUILDERS Feb 10
European banks have lost track of billions of guilders. Because of the introduction of the Euro payments run through different computer systems and different addresses. ABN Amro, ING-group and RABO-bank confirm that they are manually correcting their backlog.
Starting the first week of the introduction of the Euro banks in Europe have experienced problems with transactions between banks. They agreed to keep silent, especially since the conversion of private accounts caused no problems. According to RABO-bank the inter bank meetings at London Heathrow nowadays are dedicated in full towards the subject of lost transactions and lost accounts. "The banks have underestimated the problems", the RABO-bank speaker stated.
Especially banks most active in the international financial traffic, like ABNAmro and Deutsche Bank, experience grave problems, however exclusively with payments between banks. Private banking is problem free.
According to the three Dutch banks the problems involve payments that almost certainly took place, but were not recognizable by the receiving partner; mainly the daily calculations of inter bancary debts ...
The department "Correction foreign payments" of this bank with some 350 employees at the Amsterdam Vijzelgracht location is no longer able to keep pace with the increased workflow.
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BLOOMBERG: TROUBLE WITH EURO SETTLEMENTS January 7, 1999
New York, Jan 6 (Bloomberg) The dollar rose against the euro as U.S. stocks surged to record levels, amid speculation - denied by European Central Bank -- that banks were having trouble settling euro trades ... ECB spokesman ... denied reports there were troubles in the system that clears euro currency trades. The settlement system "worked smoothly today and there were no technical problems".
bloomberg.com
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'BUG BOND' SOUGHT FOR 2000
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Britain's largest banking groups are negotiating with the Bank of England over the scale of collateral needed to ensure that the central bank will act as a 'lender of last resort' if the financial system is threatened with meltdown by the millennium bug.
Negotiations have been spurred on by the banks' experience of the early days of trading in the euro when the entire European banking system faced repeated liquidity crises.
The banks are making preparations in case the payments system becomes gridlocked as public panic prompts massive demand on cashpoint machines while computer glitches threaten multi-billion pound behind-the-scenes financial settlements ...
Banks have started talks with the Bank of England, not only on the amount of deposit they will have to pledge but also the type of financial instrument which will be regarded as acceptable.
The Bank of England is thought to be extending the range of instruments which it will accept as collateral at the time of the millennium in order to ensure that liquidity in this area does not dry up as well. 'Typically we are expecting we will have to put up AA (high-grade) security instruments,' said one senior banker involved in the talks 'We are only being sensible - clearly we have to have contingency plans.'
A group of Europe's most prominent bankers - known as the Heathrow Group - which steered the continent away from crisis as the euro was being born - is believed to be involved in planning for the millennium, the date at which some computers may fail because they cannot cope with dates after 1999.
An organisation made up of 170 of the world's most influential financial institutions, known as Global 2000, has started debriefing top European banks on the way in which the introduction of the euro was handled in the effort to build contingency plans.
The banks are hoping to avoid having to call on the Bank of England to inject liquidity into the market even though they predict that cash problems stemming from the millennium bug could crop up from as early as September and that they will almost certainly last until the end of February.
newsunlimited.co.uk THE GUARDIAN - Friday, May 14, 1999
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BANK OF ENGLAND'S GOVERNOR TO RETIRE May 7, 1999
LONDON(Associated Press) The governor of the Bank of England won't seek a third term in office when his current five-year stint ends in June 2003, the bank said Friday. Governor Eddie George, known familiarly as "Steady Eddie," has won wide respect in London financial circles. Analysts consider him a calm and capable leader of the central bank, which in 1997 gained the power to determine interest rates independently of the government.
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EUROPEAN CENTRAL BANK PROPOSES Y2K-BUG HOLIDAY March 15
BRUSSELS (AP) - The European Central Bank wants to limit the risks of the millennium bug for the banking system by making New Year's Eve a special holiday...
The ECB and national banks from the EU member nations have unanimously agreed that Dec. 31 should be declared "a non-business day throughout the European Union."
ECB president Wim Duisenberg plans to close the European System of Central Banks on Dec. 31 -- a Friday -- to ensure its information systems are fully prepared for any problems ...
canoe.ca
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Y2K BUG A POSSIBLE STUMBLING BLOCK FOR BANK RATINGS
LONDON (Dow Jones)Banks may find their credit ratings under pressure due to the millennium computer bug, officials at two leading ratings agencies say.
The so-called Y2K problem ... is now a key topic of discussion when bankers meet with analysts at Moody¹s Investors Service, Sam Theodore, Moody¹s managing director for European banks, told Dow Jones Newswires.
By mid-1999, he said, there should be a clear understanding of what banks are doing to deal with the issue and how prepared they are.
"If we become very uncomfortable" with a bank¹s level of preparedness for Y2K, "it would be our job" to reflect that in the bank¹s ratings, Theodore said ...
Message 7775784
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"But, as a bellwether of things Y2K, the Euro transition should provide substantial peace of mind to those concerned that the world's data infrastructure will come unglued on January 1, 2000."
"As a problem of similar scale, the Euro conversion is an excellent basis for making projections about the Y2K date roll-over."
MITCH RATCLIFFE, ZDNET - January 5, 1999
zdnet.com
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Cheryl
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