Unfortunately, many of the third party business partners and infrastructure providers who will be most important to the banks usually operate outside of our regulatory authority or outside our borders. Nevertheless, we must identify the critical players and find ways to deal with them and their regulatory bodies through communication and cooperation, and, where we identify cross border risk, we need to establish communication channels with other bank supervisors to share information. Given that time is running out quickly, we must give this issue prompt attention. A number of options are available, and supervisors should consider implementation of these options before the date change. We should review each option to ensure that it does not pose a moral hazard that could harm market operations.
Liquidity risk is the second important concern.
Of course, the most important step we can take here is prevention. Promoting and preserving public confidence in the face of sensationalized reports may require coordination between the industry and banking supervisors. We must encourage banks to establish communications plans or customer awareness programs, and supervisors must also be prepared to deal publicly with Year 2000 issues, even seeking opportunities to do so. Our assumption is that transparency and disclosure of industry efforts and aggregate industry assessments will provide the public with information necessary to make informed decisions. Nevertheless, we expect banks to be prepared for greater liquidity demands closer to the date change.