It is essential for regulators to identify weak links in the financial system and alert financial institutions to potential systemic problems. Financial institutions themselves must be concerned with not only their own systems, but those of their counterparties and business partners. A financial institution with perfectly compliant computer systems could still be vulnerable to failures by its correspondent banks or borrowers. I believe the regulators should use their influence to increase awareness of the Year 2000 problem and encourage remediation efforts. While most financial institutions in the United States are aware of the problem, many other types of businesses, especially small ones, have not started to consider the issue.
Foreign countries are far behind the curve.
The financial institution regulators must use their influence to encourage foreign governments to aggressively address this problem. In a global economy, countries must work together to ensure the stability of financial systems. The failure of a foreign government to adequately address this problem is inexcusable and irresponsible. The regulators also must prepare for the inevitable failures that will occur as a result of the Year 2000 problem. Adequate contingency planning is the key to preventing failures at individual institutions from rippling through the financial system as a whole.