Financial Update (July-September 1998)

Masthead

Cover Story

Choice of Capital Instruments

New Look for Financial Update

Check Growth

Bank Consolidation and Lending

Technology in Banking

DEPARTMENTS

Year 2000

Did You Know?

Data Bank

The Docket

Year 2000

Atlanta Fed Hosts Century
Date Change Symposium

I n June, the Atlanta Fed sponsored a symposium on century date change (CDC) topics. The symposium was designed to update the Bank's computer interface customers and other large-volume financial institutions on the Federal Reserve's progress toward implementing software changes for the century date change and on recently released testing information. The symposium also provided an opportunity for dialogue among the participants on common CDC issues. Approximately 100 representatives from banks throughout the Southeast attended.

CDC Preparations

The symposium opened with an introduction to the Federal Reserve's CDC project, including an overview of the Fed's strategy, issues of accountability and the project's status. The project remains on schedule: both critical code and noncritical code renovation are complete, mainframe testing environments have been established, and testing is underway.

Preparing and Testing Software

Symposium leaders briefed participants on recent regulatory guidelines from the Federal Reserve Board and the Federal Financial Institutions Examination Council. They also discussed customer testing and testing dates for Federal Reserve Board systems and software, including the Federal Reserve's FedLine software.

Atlanta Fed representatives discussed the new FedLine software patches — additions to current software to make it CDC compliant — that will be sent to customers. Fed representatives also reviewed new FedLine enhancements for the taxpayer deposit module, automated auction, Savings Bond Series I, funds, National Automated Clearinghouse Association '98 products and rule changes.

Customers who use any of these products were advised to begin their software tests after they receive and install the patches. They were also briefed about preparations they can make while waiting for the patches, including testing computer hardware, internal software and interfaces for CDC compliance. Customers who do not use these FedLine products are encouraged to conduct tests as soon as possible.

The new FedLine for Windows NT was also unveiled. Its rollout will occur in three phases, beginning in the first quarter of 1999.

Sessions on business application test plans covered automated clearinghouse, statistics and reserves, funds transfer, national book-entry, Treasury tax and loan, and checks. A wrap-up session provided additional information about testing dates and procedures as well as upcoming bulletins.

During the question and answer panel discussion that closed the symposium, participants showed particular interest in testing issues, contingency plans, the operating system change to FedLine for Windows NT and minimum hardware recommendations. The discussion on many of these questions is being compiled in a document that will be distributed to symposium participants.

 

On the Millennium

 
 

Year 2000 Efforts and Costs

Some of the more frightening scenarios are not without a certain plausibility, if this (Year 2000) challenge were being ignored. But it is not being ignored. . . . Making an allowance for all costs — whether explicitly stated or not — and recognizing that the Fortune 500 firms are only part of the picture, an educated guess of the sunk cost of Year 2000 remedial efforts in the U.S. private sector might be roughly $50 billion.

— Edward W. Kelley Jr., Federal Reserve Governor
Congressional testimony, April 28, 1998

Industry Issues

The financial industry is increasingly realizing how interdependent we all are on each other. The Year 2000 must not become a competitive issue because our financial markets will only be as strong as the weakest link in the chain. Financial firms recognize that it is imperative to identify the weak links early in order to make sure that these links are strengthened or ways are found to assure that a single broken link will not bring down an entire market. Sharing information on readiness, participating in external testing exercises and making certain that successful tests are conducted sooner rather than later will not only bolster overall market and public confidence but also help to focus resources toward where they are most needed.

— William J. McDonough, President of the
Federal Reserve Bank of New York
New York Fed Conference Speech, April 30, 1998

For more information on the century date change, see the Federal Financial Institutions Examination Council's site on the World-Wide Web at http://www.ffiec.gov/y2k/default.htm. This site has links to the century date change efforts of the five U.S. banking regulators.

 
     
Year 2000 Readiness Disclosure