##ss ) which is presently chaired by william mcdonough, president of the federal reserve bank of new york. with the issuance of the us industry advisory in may, the basle committee took up the subject, forming a special task force on year 2000. subsequently, the g - 10 governors issued an advisory on september 8 to all bis member central banks and bank supervisors for distribution to their respective banks world - wide. it clearly spells out the issues pertaining to the challenge, and i strongly recommend you read it if you have not yet had an opportunity to do so. the federal reserve also produced a video entitled “ year 2000 executive management awareness ” and distributed it to all bank supervisors responsible for foreign banks that operate in the united states. in so doing, we encouraged foreign bank supervisors to intensify their efforts to address millennium issues in their home countries and to ensure that their banks were taking the necessary steps to ready their operations, including those conducted in the united states. the federal reserve and the other banking agencies are making their year 2000 supervisory material available to domestic and foreign banks, and the general public over the internet. the federal reserve has already distributed about 20, 000 copies of our video, many in response to requests from abroad, and our web site hot links to that of the bis and many other year 2000 sites world - wide. by widening the availability of information on an international basis, we hope to encourage global readiness. the bis is also working with the international organization of securities commissioners and the international association of insurance supervisors to address this important issue. together, they will convene a meeting in april of international financial supervisors and financial organizations to focus on year 2000 and address issues of concern to all. based on concerns expressed by banks, the work of the bis task force and our own inquiries, we believe that certain countries around the world have not embarked on aggressive compliance supervision and examination programs, so that there is a likelihood that banks in those countries have not yet begun to effectively address the problem and will now find it increasingly difficult to be ready. we are concerned that many us offices of foreign banks may be particularly exposed if their parent is not ready for the year 2000. therefore, we have asked the us branches and agencies to confirm that they will be able to continue to conduct business using the same standards for readiness that we apply to domestic banks. those that rely heavily on their parent for information processing and risk management are expected to be able to demonstrate to examiners that these systems are being read

##ied for the year 2000. further, federal reserve supervision policy calls for direct contact with the parent bank to ensure its awareness of the requirements. when problems are identified, contact with the home country supervisor may also be warranted to coordinate a thorough understanding of the bank ’ s plans for the readiness of its us operations. in so doing, we hope to be better able to address any institutions that have not made sufficient progress toward resolving the issue with their us offices. given the unique characteristics of a branch operation dependent on a foreign parent that, in turn, is subject to the authority of its home country bank supervisor, the federal reserve and other us banking agencies must carefully consider any necessary follow - up with the appropriate international authorities. compounding our concerns about international readiness are a number of competing initiatives that further stretch the limited resources available to achieve preparedness. in 1999, the euro will be introduced requiring record keeping of financial transactions in a new currency. extensive planning and programming will be necessary to permit foreign exchange trading and other cross border transactions to be conducted in the euro, with the added complexity of the continued circulation of various national currencies for several years. of course, banks outside the european monetary union that are trading counterparties will also have to program their computers to accommodate the euro. similarly, plans in japan call for extensive deregulation of various segments of the financial markets relatively soon. these and any other high priority efforts will exacerbate the problem of preparing for the century date change by competing for limited resources. i suggest that all nations should assess their respective financial initiatives and determine if any opportunities exist to defer projects that can wait until after 2000. we all need to recognize the magnitude and overriding importance of this task and take action to protect vitally needed resources from being diverted to other projects that may be of lesser priority. concluding remarks in closing, let ’ s take a moment to ask what you can do. first of all, be alert to recognize any danger signs in your own organizations and in your counterparties, customers and borrowers. for those of you involved in underwriting and dealing in securities, solid evidence of year 2000 readiness should be part of your due diligence. you will know you likely have a problem if you hear that the year 2000 is “ not an issue for our shop ”, or if you hear “ we can handle the year 2000 within the normal planning process without significant budget implications ”, or if you hear that the year 2000 “ is a technical