better measure cyber risk will allow banks and supervisors to improve their understanding of the direct and indirect costs of a cyber disruption. an incident poses direct costs on an affected bank and its customers, as well as indirect costs to other market participants who are connected to the affected bank. for instance, researchers at the new york federal reserve bank recently modeled how a cyber incident could be transmitted through the 1 / 3 bis - central bankers'speeches u. s. financial system under a variety of circumstances. 3 the authors estimate how the impairment of a single large bank, a group of smaller banks, or a common service provider could be transmitted through the payments system and result in significant spillovers to other banks. spillovers to the broader financial system are estimated to be especially large when attacks are timed to maximize damage, further highlighting challenges that arise with protecting against cyber risk. in addition, the researchers estimate that the potential impact of a cyberattack is systematically greater during stressed financial conditions. this indicates that we need a deeper understanding of how cyber risk interacts with traditional challenges to financial stability. 4 many of the participants in today's conference are working on research that will advance our knowledge of cyber risk and financial stability, and i am looking forward to continuing to follow work in this area. despite progress in recent years, techniques to quantify cyber risk are still at a nascent stage, in part because of a lack of good data. better data on cyber threats and vulnerabilities will enable us to identify and assess threats to banks and the financial system. in addition, improved data on interconnectedness between financial institutions and service providers will help identify and measure the impact of an incident on the broader financial system. the ability to quickly identify patterns, connections, and vulnerabilities will enable quick response, and may mean the difference between a controlled event and one that has a serious impact. we are supporting efforts to further study this subject through public - private coordination groups. in addition, cyber incident reporting will provide better data on the frequency, severity, and locality of cyber incidents that will enhance our collective ability to respond to these events. i am heartened to see that many of the attendees and speakers at this conference come not just from the united states, but also from around the globe. today's globalized financial system and the global nature of cyber threats demand international coordination from both participants and regulators. in closing, i look forward to hearing more about what you all accomplish during the remainder of the conference,

mr ferguson reviews the progress on year 2000 readiness and focuses on public disclosure and public confidence in the united states remarks by mr roger w ferguson, jr, a member of the board of governors of the us federal reserve system and chairman of the joint year 2000 council, before the george washington university y2k group in washington, d. c. on 29 july 1999. * * * as the countdown to the year 2000 continues, and with only five months to go until the new year, it is certainly prudent for us to focus now on the year 2000 readiness of our nation and, indeed, the entire global community. so i applaud the research program in social and organizational learning here at george washington university for sponsoring this wide - ranging conference. over the course of several days, this assembly has discussed important issues in many sectors of our economy. these year 2000 discussions, and others like them around the nation, will help to create public awareness and understanding, which are very important building blocks in the structure of public confidence. i will come back to the confidence issue in a few minutes, but i will commence with a review of progress to date. preparedness of the domestic banking industry first i want to provide today some perspectives on the year 2000 readiness of the us banking sector. at the federal reserve we are closely involved with preparations for the century date change in the financial sector here and around the world. we expect there will be glitches. nothing this complex can be completely without fault. however, i want to confirm at the outset that the federal reserve is ready for the year 2000, and every current indication is that the domestic banking system is, for all practical purposes, also ready for a smooth transition. much of my emerging confidence results from the fact that the federal reserve system is fully prepared for the year 2000 ; 100 % of the federal reserve ’ s mission - critical systems are ready. at the federal reserve board and the 12 district banks, we are using today the automated systems that we will use in the year 2000. in fact, we have been testing these systems for more than a year with banks and thrifts that are linked to us around the country for payments and related functions. these tests have gone extremely well. this is significant because the federal reserve banks operate the hub of the nation ’ s payments system, providing depository institutions with essential services in cash, checks, and electronic payments. thus, because of the federal reserve ’ s readiness, americans can have confidence that