do the job this time. • obtaining adequate resources will not be an issue - - our organization has a great technical staff and we can always hire additional resources if it becomes necessary. good luck. as a bank supervisor, the federal reserve bank of new york will do whatever it can to encourage banks to set up and adhere to programs that deal with year 2000 problems. our examiners will focus on how well individual banks are doing and will highlight for senior management and directors those instances when progress may be lagging. this oversight will include not only u. s. banks, but also the u. s. branches and agencies of foreign banks. however, the motivation and determination to cope with the year 2000 problem must come from within banking organizations rather than from supervisory oversight. getting the year 2000 issue right is critical for every organization. failure to get it right will affect the integrity of the payments system and the performance of the domestic, and maybe even the global, economy. the federal reserve is working hard to make certain that our systems will be ready and fully tested. and i am pleased by the high level of central bank coordination on this issue, as the recent release of the basle supervisors ’ technical paper demonstrates. all of us need to make sure we are paying sufficient attention and applying appropriate resources to the year 2000 issue. only in that way will we be able to insure that the millennium changeover is an occasion for joy and optimism.

mr. mcdonough considers the challenge presented by the year 2000 problem remarks by the president of the federal reserve bank of new york, mr. william j. mcdonough before the annual membership meeting of the institute of international finance in hong kong on 21 / 9 / 97. i am pleased to be able to share my thoughts with you today on an issue that is sure to challenge every one of our organizations for the next several years - - the year 2000 and how the century date change poses a very significant risk for financial markets. as i look at the membership of the institute of international finance gathered here in hong kong, i cannot help but be impressed as to how truly global financial markets have become. realizing that this meeting is being hosted here in hong kong, with the people ’ s republic of china as the host country, further underscores how rapidly the world is changing and how interdependent we are. as a central banker, i worry a lot about events that could disrupt financial markets. many of the events that i worry about are hypothetical. in those cases, a large part of my job is to convince others that the hypothetical event in question is sufficiently possible that it is in the industry ’ s best interest to work together to try to avoid the event and related problems. today, i am sure that i do not have to convince you about the inevitability of the approaching century date change. it is a certainty. what remains for me to do is to help put the dimension of the year 2000 issue in perspective and suggest some of the actions that are necessary now if we are to avoid potentially serious problems down the road. as recently as the early 1990s, few banks and other financial institutions paid much attention to the year 2000 problems. after all, using two digits in programs to represent the year made sense for decades. many institutions didn ’ t recognize the problem at all ; others speculated that changes in technology would somehow appear and solve the problem. now, however, delays have come back to haunt those institutions that acted passively, or not at all, in marshalling the resources needed to manage the problem. financial institutions depend on the proper sequencing of events and calculations based on dates, but the logic built into applications to sequence events and perform calculations will not work properly when we hit 2000. as a result, year 2000 issues pervade every business area of all financial and non - financial institutions. as if that were not enough, the problem is not just limited to