the importance of cross - firm coordination in tackling these systems issues in the new era. in addition, there will be learning on how best to perform contingency planning for these cross - firm, cross - border events. finally, the euro conversion experience may be seen as a leading indicator for the year 2000 weekend that will follow a year later. if things proceed well, many may interpret that as lessening the pressure, and efforts to prepare for year 2000 might appear to have a lower priority. if euro conversion is not as seamless as expected, the perceptions of year 2000 risk will likely increase, possibly leading to excessive concern and overreaction. it will be incumbent upon knowledgeable and balanced commentators to assess the situation coolly and point out appropriate similarities and differences between the two events. disclosure and transparency one way in which we can all ensure that balanced and rational discussion prevails is by adequate disclosure and transparency. the lack of adequate information on year 2000 preparations by firms and countries is a significant concern because, as we have seen recently, lack of information may feed negative perceptions in the marketplace. the interdependence of financial institutions, markets and payments systems, and the overall dependence by firms on the readiness of the public infrastructure, make it very important for firms and countries to share information on the status of plans and preparations. the year 2000 problem could potentially lead to a cross - border reassessment of counterparty and country risks similar to that occurring now. unless we continue to make steady progress in preparing for the century change and communicate clearly how we are doing, we may experience what i call the “ year 2000 shadow ” in the financial markets. financial market participants, and entire countries, may find that capital will become scarce, or at least dear, if they are not seen to be making sufficient progress toward resolving this problem. the uncertainty surrounding preparedness for year 2000 may make markets less liquid as institutions seek to insulate themselves from risk with counterparties who are thought to be unprepared. the financial cost of this is not clear, and i am not one of those forecasting recession as a result of a year 2000 slowing, but we know from recent events that a flight to liquidity can have severe repercussions in the real economy. in the united states, legislation has recently been passed by congress to protect firms that share information in good faith on the status of their year 2000 projects. in july, the us securities and exchange commission issued new guidance

important service by remaining attentive to the important task that we face in preparing for the century date change. interaction between year 2000 and the euro the current economic backdrop is not the only challenge facing those of us with a focus on the year 2000 challenge. most countries represented here today are also making a significant investment in preparing for the introduction of the euro. while the introduction of the euro is an event to be welcomed by market participants, it does raise several interesting challenges for year 2000 preparations. first, of course, is the contention for scarce it resources and the issue of whether there are “ economies of scope ” in these two projects or at least a benefit in “ learning by doing. ” the overlap between the two problems and two technical solutions is not as great as many would like. at the narrowest level, they involve different approaches to the technical solution. more generally, the testing approaches are different, with the euro relying on operational testing and year 2000 being more of a technical test. finally, year 2000 involves embedded systems while the euro will not affect systems with embedded chips in most cases. there may also be contention for another limited resource, which is top management attention. year 2000 was initially considered a technical problem, which many managers may have thought could be best handled by technicians. the euro conversion is obviously a business issue, which entails strategy and is more accessible to the well - informed senior manager. more importantly, the euro may be seen by some as having revenue potential that comes from offering new services ahead of competitors. year 2000 may offer some revenue opportunities, but it is probably most correctly perceived as a cost concern for many senior managers. both conversions must be managed as business issues because of the significant risks they both pose to operations. some commentators may have created another, false, relationship between these two technical challenges by suggesting that the year 2000 problem is a creation of some that want to distract attention and resources from the euro. i know of no responsible person who would create the need to spend the large sums necessary to prepare for the century date change or risk other disruptions for the purpose of diverting attention from a legitimate and beneficial effort of creating a common currency for a major economic region. in addition, computer professionals have known of this problem for years and are, i believe, universal in recognizing its importance. however, the story is more complex than these elements of resource contention ; there are some benefits from having these two major systems changes in close proximity. first, we can all learn about