FINANCIAL MARKETS WORKING GROUP REPORT
FAULTS FOREIGN Y2K PROGRESS

November 4, 1999

WASHINGTON-- Representative John D. Dingell (D-MI), Ranking Democratic Member of the House Committee on Commerce, today released a 16-page report on domestic and global financial institution and regulatory efforts to address international Year 2000 risks. The report was prepared by the President’s Working Group on Financial Markets in response to Rep. Dingell’s May 18, 1999 request. The Working Group consists of the Department of the Treasury, the Board of Governors of the Federal Reserve System, the Office of Comptroller of the Currency, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.

"This report raises very serious questions about the adequacy of Y2K preparation on the part of numerous foreign institutions and key infrastructure components, both foreign and domestic. While a number of significant steps have been taken, there are less than two months left, and the clock is ticking with renewed urgency."

The Working Group’s key findings:

• Excellent progress continues to be made to avoid serious problems within the global financial markets (p. 1).
• The President’s Working Group believes that the financial markets in industrialized countries will be prepared for the Year 2000 (p. 16).
• Information about Y2K readiness varies considerably from country to country. Clearly, some countries lag in disclosing the extent of their readiness. Even though disclosure has, overall, improved greatly in recent months, it is still incomplete in less-developed countries and in some industrialized countries (p. 10).
• Most large financial institutions in countries that reflect the greatest exposure to U.S. banks are completing external testing programs with key global exchanges and payment agencies. Tests of global payments systems in mid-June and mid-August were successful and demonstrated the Y2K preparedness of the major players in the global financial community (p. 14).
• Nonetheless, concerns remain about the readiness of (1) the financial sector in several small European markets; (2) key public and private institutions and the infrastructure in a number of developing countries (falling into this group are China, India, Russia and a number of developing countries in Central America, Eastern Europe, Africa, and Southeast Asia); and, (3) small to medium size enterprises globally, including in the U.S. One risk is the potential for a "domino" systemic effect brought about by significant disruptions to these groups because of the Y2K rollover (p. 14).
• Many of the foreign countries that are least prepared for Y2K are important energy exporters. Any significant disruptions from the century date changeover to that industry locally could have a negative impact on the U.S. and global economies (p. 15).

[Copies of the report may be obtained from the Treasury Department.]