This report has been prepared and compiled by the Secretariat of Finance and Public Credit of Mexico (SHCP) by request of the Committee on Hemispheric Financial Issues (CHFI). As such, it does not reflect the views or opinions of the SHCP. The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and its accuracy cannot be guaranteed. If more information on the subject is required please contact national authorities or check the web sites provided in section two.
Y2K Status Report
I. Individual Country Reports:
St. Kitts and Nevis
Saint Vincent and the Grenadines
Trinidad and Tobago
II. Comparative Tables
Y2K Status ReportInformation Provided for this Report
National Coordinating Entity
Action Plan (Stages)
Financial Sector Status
Official Estimated Conclusion Date (Financial Systems)
Informaiton Provided by the Finance Ministries
Y2K Web Sites
III. Final Remarks
Letter Sent to Finance Ministries on April 26, 1999
Y2K Status Report
Background on the Y2K problem
In the 1950's, when the data memory systems consisted of perforated cards, scientists designed a computer language called COBOL. With the purpose of saving space in the memory of computers, scientists reserved a total of six digits for the date (two for the day, two for the month and two for the year) without taking into account the fact that, when the new millenium began, computers would automatically return to the year 00, as if it were 1900, and not 2000. This error is known as the Y2 K problem. /1
The Y2K problem was detected in the early sixties but at the beginning was not given great importance. However, as the use of computer systems and electronic devises expanded, the vulnerability of nations to their failures or malfunctioning increased considerably. /2 The magnitude of the Y2K problem is largely explained by the fact that all computers and microchips, controlling all kinds of electric devises are subject to the two digit mistake. All equipment that needs to register time and date for its operation faces the risk of producing incorrect results (inventories, interest calculations, payment of services, fabrication dates, production programs, etc.) and could even stop working.
In this respect, the Y2K problem represents a serious challenge to our countries and constitutes a threat to the adequate functioning of our economies. /3 The financial sector, in particular, is subject to the Y2K problem, mainly due to the sector's intensive computer related systems and the linkages that exist between financial institutions around the world.
The Purpose of the CHFI Report on the Y2K Conversion Status
During the 12 the Committee on Hemispheric Financial Issues (CHFI) meeting that took place in Paris, France, on March 14, 1999 Finance Vice-ministers expressed their concern with respect to the impact that the Y2K problem could have on financial systems across the region. They agreed that it was necessary to review the actions that countries in the region had taken to deal with this problem. Mexico proposed to elaborate a report that compiles and reviews countries' self-assessments of the Y2K conversion status in their respective financial systems. /4
The report is structured as follows: section 1 examines the individual country reports on their efforts to adapt their computing systems to the Y21K problem. Section 2 presents two descriptive tables: one that summarizes the Y21K efforts carried out throughout the region and another that provides the sources of information used to prepare the report. Section 3 presents some final remarks.
It is worth mentioning that the report is based on the information provided by Ministries of Finance in the region, most of which delivered the required information in an adequate manner. However, there were cases in which countries did not send any information on the Y2K status, and others where the information was incomplete. Thus, country reports vary considerably across the region. In this respect, additional research was carried out through non-official sources of information such as country-specific Y2K pages, private firms, and international organizations. In this sense, it should be mentioned that seven countries (Antigua and Barbuda, Belize, Dominica, Jamaica, Nicaragua, Saint Lucia and Suriname) did not send any information on their Y2K status and no information was found in alternative sources. Therefore, these seven countries were not included in the report.
Finally, it is important to highlight that the present report does not intend to evaluate countries' performance regarding their Y2K conversion efforts. Its only purpose is to compile the available information on the subject and present it in a clear and concise manner.
1 Originally, the Y2K was considered a problem affecting only computer programs. However, it can also affect any mechanism that registers dates to control the operation of instruments and machinery, for example, medical equipment, security systems, air traffic control equipment, elevators, telecommunication equipment, production equipment, etc,
2 Today, there are more than 100 million computers around the world, operating in hundreds of operative languages, with thousands of applications, hundreds of million lines of codes, and an enormous amount of gigabytes containing information.
3 Estimates on the total resources allocated to deal with the Y2K problem around the globe range from 800 billion to 1 trillion dollars (Source: International Monitoring).
4 The Appendix includes the letter sent by the Mexican Secretariat of Finance and Public Credit to Finance Ministries requesting their self-assessment on the Y2K status in their financial systems.
I. INDIVIDUAL COUNTRY REPORTS
Argentina created the Executor Unit 2000, designed to coordinate and share information related to Y2K among institutions. Its purpose is to search for solutions and to help public administration bodies and small and medium size businesses in their conversion efforts.
Tasks have been divided in the following parts: (a) support to ministries and secretariats, (b) assistance to regulatory entities; (c) support to small and medium size businesses; (d) coordination with other countries in the region and (e) the creation of a web site. /1
Conversion in the financial sector is coordinated by the Central Bank through a Working Group formed by bank associations, clearing houses, the ATM network and the Superintendence of Financial Institutions.
According to a Central Bank communiqué issued on June 26, 1999, the entire financial sector (115 institutions, including 42 local banks) had already tested its systems and has achieved total conversion before June 1999.2
The Argentine government is expected to spend about 1.5 billion dollars -0.45 percent of GDP- in the Y2K project.3 This figure, however, does not include critical areas such, as the energy, water , telecommunications and financial sectors that could demand more resources. Until now, Argentina has invested 6 million dollars in Banco Galicia, Banco Río and Banco Francés.
Banks that have successfully completed their tests represent 98.4 percent of total deposits in the financial system, the remaining 1.6 percent pertains to 7 institutions that will test their systems before the year 2000.
Regarding securities activities, Argentina follows the guidelines set by the International Organization of Securities Commissions (IOSCO) with the supervision of the National Securities Commission.
1 See web site: www.sfp.gov.ar/2000
2 Banco Central de la República Argentina, Comunicado N. 34685, 22/06/99.
3 Y2K: Bulls, Bears or Bugs?, Merrill Lynch, July 1999.
The Government of the Commonwealth of the Bahamas has launched programs of public awareness and solution of issues related to the Y2K. Towards the end of 1998, the Government appointed the National Y2K Advisory Council headed by the Ministry of Finance and Planning, and the Ministry of State for Public Enterprises.
Officers from the other ministries, representatives from the major public corporations, and from the private sector also comprise the National Y2K Advisory Council. /1 Their objectives focus on ensuring the system conversion, and providing a forum for public and private sectors to exchange information on the issue.
Regarding the financial sector, the Central Bank and the Registrar of Insurance have carried out activities geared towards achieving Y2K compliance. Both institutions affirmed that the major insurers were preparing fully for Y2K, and that contingency plans are being taken to ensure that there is no major disruption of services.
The Council has gotten together to review the progress of its activities.
1. See Council's web site: www.bahamasgov.org/y2k
The government of Barbados has launched an intensive campaign towards system conversion in the public and private sectors. This campaign consisted of regular press releases to the media, as well as monitoring programs to ensure that all institutions are Y2K compliant.
According to the International Y2K Cooperation Center, the Ministry of Finance and Economic Affairs, through the Data Processing Department, is responsible for Y2K coordination in Barbados.
Regarding the financial sector, the program involved inspection of commercial banks and all institutions licensed under the Financial Institutions Act to ensure their systems conversion.
The Central Bank declared that inspection of financial systems has been completed satisfactorily. This institution has continued to implement its own internal program of Y2K readiness, now in the testing phase, and has also engaged independent consultants to review its systems.
1. See web site: http://www.centralbank.org.bb/press/jan99/jan99.htm
The Committee of National Emergency Year-2000 was created to prepare and coordinate activities towards system conversion in Bolivia. The Ministry of Sustainable Development and Planning is coordinating the Committee through the Technical Executor Unit.
Since August 1998, actions have been taken in 5 main areas (finance, transport, telecommunications, energy and health), focusing on the operative and contingency plans.
In the financial sector, activities have been developed by the Superintendence of Banking and Financial Institutions, the Central Bank, and the Superintendence of Pensions, Securities and Insurance.
According to the Superintendence of Banking and Financial Institutions, the banking sector has converted its systems with close to 80 percent of the testing phase completed. Total conversion is expected by December 1999.
The Central Bank of Bolivia has tested its own systems and the Superintendence of Pensions, Securities and Insurance has successfully completed 3 tests during 1999, while at the same time monitoring supervisory institutions.
1. See web site: www.sisteco-bo.com
The Coordinating Commission for the Year 2000 Program, made up by the office of the Presidency and the main ministries, is in charge of the supervision of systems conversion in Brazil.
The Coordinating Commission for the Y2K set different stages for the conversion. In this sense, tasks were divided in the following stages: (1) systems and digital equipment inventory, (2) solutions, period and costs presentations, (3) implementation, and (4) certification/testing.
The regulatory agencies, in turn, monitor and control the supervising entities' actions (public or private) with respect to the Y2k conversion efforts, while the Ministry of Finance supervises conversion in the public sector.
In the financial sector conversion work is basically complete. The Central Bank has reported that all banks in the country have signed the Statement of Compliance. Additionally, the banks will submit to the Central Bank contingency plans defining emergency procedures. Several Brazilian financial institutions have undertaken conversion tests without major problems. / 2 These institutions represent 81.4 percent of the national banking assets.
Brazil has spent about 35 billion dollars -in the public and private sector- to solve the millenium failure, including 175 million dollars invested by the government. In this sense, 70 million dollars have been destined for Unibanco, Itau and Bradesco. /3
The Central Bank of Brazil and other official banks also participated in monitoring and testing, including the ATM Network and credit card systems. The Brazilian Securities and Exchange Commission (CVM), following the guidelines set by IOSCO, has monitored activities of stock and futures exchanges, settlement and payment systems, trading matching systems, clearing houses and depositories.
1. Information provided by the Secretariat of State, Administration and Heritage, Commission for the Year 2000 Systems.
2. Includes: mortgage companies, brokers, investment banks, distributors, leasing companies, consortiums, banks, financial companies, credit cooperatives, real estate credit companies, and development banks,
3. Y2K: Bulls, Bears or Bugs?, Merrill Lynch, July 1999.
In February 1998, the Canadian Federal Government initiated an aggressive action plan to respond to the year 2000 challenge, and established an ad hoc Cabinet Committee to deal with all matters related to the Y2K. The Treasury Board heads this Committee, which also includes the Ministries of Industry, Foreign Affairs, and National Defense. Their respective departments have the responsibility to carry out different tasks.
In the financial sector, the Department of Finance co-ordinates and shares information with the Bank of Canada, the Office of the Superintendent of Financial Institutions (OFSI), and the Canada Deposit Insurance Corporations to cope with the Y2K problem and to assess its financial implications.
Canada's banks are now in the final stage of their Y2K preparations, confirming their systems' readiness by verifying their links with other financial institutions and checking interfaces with other service providers.
Each bank regularly reports its work to various regulatory and government bodies including the OFSI, and through the Canadians Bankers Association and other means, banks continue to collaborate to address technology interdependencies within the financial sector and with other industries.
According to the OFSI, to date, the majority of provincially and federally regulated deposit-taking institutions have indicated they will be Y2K ready. Also, the Canadian Bankers Association has created a number of Y2K working groups, with broad representation from Canadian financial sector, to focus on key areas such as preparedness, liquidity, business continuity, international payments systems and contingency planning.
In the securities sector, the Canadian Securities Administrators has appointed the Ontario Securities Commission (OSC) to take the lead on their behalf in administering a Y2K strategy for the entire securities sector. The OSC is requiring market participants to report their Y2K readiness.
The most important clearing and settlement systems operated by the Canadian Payments Association and the Canadian Depository for Securities are Y2K ready, they have completed internal testing, point-to-point testing, and are finishing contingency plans.
1. Information provided by the Department of Finance of Canada on June, 1999. http://www.info2000.gc.ca
The Inter-Ministerial Committee, created in October 1998, is responsible for the coordination of Y2K issues. This institution is in charge of adopting and coordinating preventive measures and subsequent evaluations.
The Committee is formed by five Working Groups: Government, Public Contingency, International, Development and Defense. These, in turn, report to the Ministries of Finance, Planning and Development, Interior, Defense, Economy, Foreign Affairs and the Secretary of Government. / 2 The Y2K Committee interacts with the private sector through the regulatory entities.
With regard to the financial sector, several regulatory institutions participate in coordinating Y2K issues. The Superintendence of Banks and Financial Institutions is in charge of banks and financial institutions, while the AFP (the Pension Fund Administration) supervises pension fund managing companies.
The financial sector has shown the highest level of Y2K readiness in Chile. The banking system successfully completed its second total testing process on June 18-21 (covering 33 financial institutions, including Banco del Estado and the Chilean Central Bank), that represent 90 percent of the system. The insurance sector has completed 63 percent of the implementation and testing stages.
Conversion of the securities sector is in charge of the Superintendence of Securities and Insurance, according to guidelines set by the International Organization of Securities Commissions (IOSCO). 55.7 percent of the listed stock market corporations have completed the planning process, while 25.7 percent have finished the testing stage.
Most of the Chilean companies are under the contingent trial phase. According to brokerage firm Merrill Lynch, the best prepared sectors for the millenium change in Chile are the banking, financial, telecommunications, and transport sectors. Additionally, about 80,000 medium and small companies have begun their conversion process. The Chilean banking sector has spent around 200 and 300 million dollars in this process; the government has spent 324 million dollars, and the medium and small businesses have spent about 380 million dollars. Investments destined to the Y2K conversion in Banco Santiago, Santander-Chile, Banco Edwards and BHIF amount to 7.48 million dollars. /3
1. Information provided by the Ministry of Finance of Chile, July 1999.
2. See web site: www.a2000.cl
3. Y2K: Bulls, Bears or Buqs?, Merrill Lynch, July 1999.
The responsibility for the Y2K conversion in Colombia lies in an Advisory Council, created by the Colombian government in September 1999. The Council is responsible for designing and implementing conversion plan, as well as disseminating the information it deems necessary.
A "coordinating entity", formed by the Ministries, supervisory bodies, and business associations, was created for 26 key sectors of the economy.
Today, the financial sector is one of the most advanced in its conversion plan. Practically all the institutions in the sector have concluded their diagnosis stage and are currently engaged in testing new equipment and designing contingency plans. The coordination entity for the financial sector is divided in three working groups: 1) securities, 2) credit institutions, and 3) financial services.
According to a report by the banking supervisory body (Superintendencia Bancaria), 45 per cent of the financial institutions have to step up their conversion efforts in order to be ready before the established deadlines. 80 percent of private financial institutions certified their conversion status in May 1999. Official banking institutions, which were relatively behind in their conversion schedules, have achieved significant achievements in recent months lately.
Colombia has spent about 1.5 billion dollars (1.5 percent of GDP) in the modification of the computing systems in all sectors of the economy. About 27.8 2 million dollars have been assigned for Banco Ganadero, BanColombia y Banco Bogotá. /2
1. Information provided by the Ministry of Finance and Public Credit, May 1999.
2. Y2K: Bulls, Bears or Bugs?, Merrill Lynch, July 1999.
COSTA RICA /1
The Commission 2000 was created on August 4, 1998 to prepare for the Y2K conversion challenges /2. The Ministries of Science and Technology, Public Health, and Finance integrate the Commission. It also includes the Executive President of the Costa Rican Institute of Electricity (ICE) and the President of the Professional Institute of Informatics and Computing (CPIC).
Tasks have been divided in sectors, prioritizing energy, health and finance. Conversion in the financial sector is coordinated by the Ministry of Finance, private banks, and the National Institute of Insurance (INS).
Sixty-nine percent of the financial institutions have achieved 100 percent of their system conversion. The others vary between 85 and 90 percent.
Within the Ministry of Finance, most of the conversion activities have been implemented by the following: the General Tributary Directorate, the General Customs Directorate, the Information Technology Directorate, and the General Administrative Directorate. Each Directorate has implemented its action plan and its goals should be met by August-September 1999.
1. Information provided by the Ministry of Finance, as of April 1999. http://www.micit.go.cr
2. Executive Decree No. 27205-MP-MICIT, August 1998.
DOMINICAN REPUBLIC /1
On August 20th 1998, the President of the Dominican Republic, Dr. Leonel Reyna, created the Government Commission for the Millenium Transition.
The main objective of this commission is to advice government entities and private organizations that request its service, as well as to provide policy and management ideas to implement the conversion processes on time.
The purpose of this Commission is to coordinate the conversion strategy to be implemented in the different State institutions, emphasizing consistency and efficiency, an elaborating a work plan and an action calendar.
This Commission also serves as a consultant for State institutions in the implementation of correction plans, participating in product selection, technique tools, and recommending the use of the necessary resources.
1 http://www.comision2000.-gov.do, http://www.presidencia.gov.do/aprensa.htm
The National Council for Modernization, through the Project for State Modernization (MOSTA), is in charge of the Y2K conversion in Ecuador. Within this framework, the Committee for the Year 2000 was created to advise, coordinate and supervise conversion in the financial sector. Representatives of the Ministry of Finance and Public Credit form this Committee.
Of the 300 computers the Ministry of Finance and Public Credit has, 70 percent have a Pentium processor already certified. MOSTA guarantees that more than 80 percent of the computers will not have any problem by the year 2000. It is expected that the rest of the computers will be ready by September 1999.
The Ministry of Finance is developing contingency plans, identifying key areas regarding the Y2K conversion.
1. Information provided by the Ministry of Finance, June 1999. See website http://www.foroy2kamericadelsur.org/ecuador/index.html
EL SALVADOR /1
The Presidential Commission for the Public Sector Modernization was created to prepare and coordinate activities towards systems conversion in El Salvador. Several public sector institutions, including the Financial Sector Superintendence, the securities, and pensions supervisory bodies, the Central Bank and the National Committee of Informatics participate in this Commission. The Government's actions are complemented with the support of the World Bank.
In the financial sector, activities regarding Y2K conversion have been coordinated by the Financial Sector Superintendence. In this sense, since September 1998, financial institutions have been examined. According to the Financial Sector Superintendence, 43 financial entities have fully achieved the system conversion, while 39 have been studied (including banks, insurance companies, and funds administrators), and 5 do not have to convert their systems. Additionally, seminars and workshops have been given, focusing on the operative and contingency plans that need to be carried out.
1 Information taken from the Forum "Responsabilidad de/ Estado Frente a la Problemática del Año 2000", April 1999. See website http://www.cpmsp.gob.sv
The Government of Grenada created the National Year 2000 Committee in August 1998, consisting of public and private officials who will manage the country's response to the Y2K issue.
The status report on critical systems employed by the Government and statutory bodies has been completed and the conversion is on track. Additionally, several regional and international agencies are involved with the local team in the effort to address the problem.
The Y2K Management Team has set October 30th, 1999 as the deadline for full conversion compliance. Moreover, the Government is seeking access to a World Bank grant to complement its funds for implementation of the plan.
Regarding the financial sector, banking and financial institutions, including local institutions, have carried out extensive and thorough Y2K upgrades and testing with good results. The offshore banking sector is gradually reporting compliance and readiness. The Standard Integrated Government Financial Information System is being implemented within the office of the Accountant General.
The National Insurance Scheme carried out a hardware upgrade. The Y2K tests are completed and implementation date was June 30th, 1999. Final overall testing was finalized by August 31, 1999.
The Inland Revenue System was upgraded by mid-end August 1999 and the Customs Department is working and relying on solid contingencies. The lack of funds appear to have adversely affected the process, therefore implementation and testing dates have not been confirmed.
According to the Ministry of Finance, all operations within the country are covered by contingency plans and the Committee is urging individual entities to draw up their own unique contingency plans.
1. Information provided by the Ministry of Finance, June 1999.
The National Committee for the Year 2000 Emergency System is the institution in charge of the conversion in Guatemala. The Committee distributes the activities among each ministry or regulatory entity in the country. Additionally, it launched a plan for system conversion, divided in 3 stages to be implemented by each entity.'
The Ministry of Finance is in charge of the Y2K activities in the financial sector and is responsible for supervising the evolution of this sector. The Ministry of Finance has completed 100 percent of the diagnosis stage, has completed 84 percent of the inventory and analysis stage, 16 per cent of the testing and verification stage, and 9 percent of the validation and support stage.
1. See the detailed information of each stage at the website: www.dia2000.org.gt
The National Year 2000 Committee was formed on December 1998, in order to coordinate the activities related to Y2K conversion in Guyana.
Since Guyana is a country with a moderate level of computerization and complexity, grants have been obtained from international financial institutions to complete conversion. The Y2K Committee has been divided in the following subgroups: social, financial, manufacturing, utilities and infrastructure, and standards. Independent consultants support these subgroups.
1. Report prepared by the Government of Guyana: "Millennium Bug Activities", available on http://www.guyana.org
In Haiti, a Technical Committee is responsible for the tests of the millenium bug. This committee's function is to detect the materials used in electronic devices that may be damaged after the 31st of December of 1999.
In the financial sector, the Bank of the Republic of Haiti (BRH) has proposed the creation of a Committee in which representatives of commercial banks and other financial institutions share information about Y2K conversion.' This Committee is also in charge of targeting the weaknesses of the banking system on the Y2K status, and to prepare a contingency plan for the whole banking system.
The BRH has also prepared a supervisory plan, by which commercial banks and financial institutions are supervised in order to verify that they have correctly tackled the problem and will cope with the Y2K without any difficulties by year-end.
1. See web site: www.brh.net/infodev/Y2000.htm
The Honduras Council of Science and Technology report updated to January 30, 1999, states that the Honduran financial sector has confirmed its systems readiness and is in the process of checking interfaces with other service providers. /1
The banking system has completed 66 percent of the conversion process, while savings and loans institutions have completed 80 percent of the conversion. On the other hand, insurance companies, financial companies, and money exchange companies have completed 90 percent, 74 percent and 85 percent of the conversion respectively.
The securities sector and the stock exchange market, have completed 49 percent of their total conversion plans.
With regards to contingency plans, the Council of Science and Technology of Honduras has published a manual that includes a contingency plan. Additionally, testing programs were programmed for May-June 1999.
1. Information provided by the Secretariat of Finance, as of April 1999.
The first coordinated efforts to deal with the Y2K problem started in early 1997 in the financial and public sector when Banco de Mexico and the Secretariat of Comptroller and Administrative Development (SECODAM) issued regulation to that aim.
In June 1998, the Year 2000 National Conversion Commission was created. The National Institute of Statistics (INEGI) heads the Commission. /2 Three broad groups were created inside the Commission to cover the national spectrum: the Public Sector, the Financial Sector and the Non-financial Private Sector. Moreover task forces were also created to deal with the strategic components of the economy such as telecommunications, electricity, oil and so forth.
The Central Bank was invited to coordinate the Y2K project of the financial sector. To accomplish this goal a high-level coordinating group was set up. This group encompass the authorities that are responsible of the supervision of the financial system: the Secretariat of Finance and Public Credit, Banco de Mexico, the National Banking and Securities Commission, the National Retirement Commission, and the National Insurance and Surety Commission.
The Y2K National Commission designed a methodology to measure the progress of each institution or firm through a self-assessment of 31 points grouped into the five traditional categories of: 1)awareness, 2) assessment and planning, 3) remediation, 4) testing and validation, and 5) implementation. All public sector agencies and financial institutions followed this methodology for their quarterly reports. In all cases the chief executives were responsible for the figures reported.
Financial authorities instructed financial institutions to elaborate Y2K contingency plans through regulation issued in February 1999. Monthly reports on this topic were requested. The regulation also instructed the institutions to perform external testing as required by authorities and clearing and settlement service companies.
More than 2.1 billion dollars have been invested in Mexico to tackle the Y2K problem. Government has invested almost 243 million dollars, while private sector has invested 1.5 billion dollars, and the financial sector estimates that the total cost of its conversion will be around 350 million dollars.
At present the financial sector has completed conversion and testing, and is in the final stages of contingency planning. The public sector is well advanced in the conversion and testing phases and is working in contingency planning. Large companies in the private sector seem well prepared. The status of small and medium size companies is uncertain, although a good progress has been observed in the past few months.
1. Report prepared by Banco de Mexico. See web sites: www.y2k.gob.mx , www.inegi.gob.mx , www.banxico.gob.mx , and www.shcp.gob.mx
2. National Commission for the Computing Systems Conversion, March 1999.
The Millenium Bug Commission was created by Executive Decree on august 1 9th , 1998. Its goal is to coordinate and review the Y2K conversion plans. For that purpose, it established the following stages: 1) diagnosis, 2) impact studies, 3) system modernization, 4) validation, and 5) implementation.
The conversion in 97 per cent of systems and hardware has been completed. The rest will be Y2K compliant once the telephone central station is replaced for its modernization. However, while the new equipment is acquired, a contingency plan has been implemented.
1. Information provided by the Ministry of Economic and Finance, July 1999.
The Year 2000 National Commission, created in May 1998, is in charge of providing the functional and legal framework for the implementation of the Y2K Plan, which deals with the issues arising from the Y2K problem. /2 The Commission is formed by members from the Executive Branch, the National Council of Science and Technology, the Ministry of Finance, and several decentralized institutions.
Regarding the financial sector, the Ministry of Finance and the Banking Superintendence coordinate the conversion activities. In order to make the Y2K status more transparent, commercial, mortgage and development banks, leasing companies, consortiums, housing institutions, and credit cooperatives were requested to disseminate the status of their systems' conversion in their financial statements.
1. See website: http://l18.104.22.168/sudeban/ano2000/circular6.htm
The National Institute for Statistics and Computing (INEI) is the coordinating entity for the Y2K conversion in Peru. For this purpose, a National High-Level Commission and various technical committees, were created.
Regarding the financial sector, one of the specialized technical committees, formed by the Banking and Insurance Superintendence (SBS) issued a resolution that approves the "Norms to Face the Y2K Risks". Financial institutions and insurance companies in Peru have followed this norms and developed an action plan ("Plan de Acción 2000"). The plan's stages and deadlines are as follows: 1) identification and planning (which was completed in time on March 15, 1998), 2) adequacy and renewal (completed by July 30, 1998), 3) validation (89 percent completed, 4) implementation (81 percent completed). Most financial institutions have delivered their monthly contingency plan reports.
The SBS required Peruvian financial companies to report on their progress regarding the conversion status. According to the information available, the Y2K conversion budget for the financial sector amounts to 70 million dollars. This figure includes both equipment and software renewal, as well as specialized consultations. It also includes investment in technological modernization in the financial system as a whole.
The continuous supervision by the SBS, advised by an international consultancy firm, includes regular inspection visits to evaluate the degree of convertibility in the financial sector.
1. Information provided by the Superintendence of Banking and Securities, July 1999. See website http://www.inei.gob.pe/pia2000/que/quepia.htm
ST. KITTS & NEVIS /1
The National Y2K Task Force (NY2K), created by the Office of the Prime Minister, coordinates the systems conversion. The National Y2K Task Force's actions have focused on the following sectors: telecommunications, electricity, water, finance and banking, health, social security, aviation, shipping, fuel and oil, and food import and distribution.
According to the NY2K Task Force, the St. Kitts Sugar Manufacturing Corporation, the Development Bank, the national social security system, and the St. Kitts and Nevis Air and Seaports Authority are well advanced in their Y2K conversion projects and are scheduled to complete such projects well before the end of the third quarter of 1999.
Regarding government departments, most ministries, including key departments such as Finance and Planning, Inland Revenue, Customs and Treasury have already completed hardware testing and remediation activities, and software testing is currently under way. In all cases, activities are on schedule for compliance by the third quarter of 1999.
All banks have successfully completed comprehensive testing of their systems. The emphasis has now shifted to the contingency planning phase of the Y2K project; the contingency arrangements are scheduled to be in place by September 30, 1999.
1. Information provided by the National Y2K Task Force, Office of the Prime Minister, July 1999.
ST. VINCENT & THE GRENADINES /1
The Government of St. Vincent and the Grenadines established the Year 2000 Steering Committee to deal with the Y2K problem. Its purpose is to search for solutions and to help public entities and small and medium size businesses to achieve their conversion plans.
In the financial sector, four branches of foreign-owned institutions and one national 2 owned bank, the National Commerce Bank, comprise the commercial banking system
The National Commerce Bank has contacted American institutions for support on this issue. The restructuring and rewiring of the bank is almost complete.
Despite the fact that the use of computing systems is still low in the credit unions and building societies, several awareness and information campaigns have been organized. The government of St. Vincent believes that this sector will be Y2K compliant before the end of 1999.
1. Information provided by the Ministry of Finance, Planning and Development, July 1999.
2. The four foreign-owned banks are Barclays Bank PLC, Caribbean Banking Corporation, CIBC Caribbean Ltd. and Bank of Nova Scotia. These institutions have indicated that their systems are Y2K ready and contingency plans have been finalized and tested.
TRINIDAD AND TOBAGO /1
The Government is working both to solve the Y2K conversion problems and to monitor the progress made in the public sector. The Government's actions have focused on three main goals: 1) increasing private sector awareness; 2) dealing with specific conversion problems in the public sector, 3) ensuring the readiness of the national infrastructure.
On March 1998, a Cabinet-appointed Steering Committee was set up to investigate the impact of the Year 2000 challenge on the national economy. The findings of the Committee have been the basis for subsequent conversion plans and for the establishment of the National Year Task Force 2000.
The Task Force is led by the Steering Committee, chaired by the Minister of Information, Communications, Training and Distance Learning. The Committee also includes the Minister of Trade, Industry and Consumer Affaires, the Minister of Finance, and the National Year 2000 Compliance Secretariat. There is also a Co-ordination Committee that consists of several sector working groups which includes: the public service group, the financial, banking, insurance and credit union group, and the national contingency planning group.
The Board of Inland Revenue is now Y2K compliant and the new software application at the VAT office will be completed by the end of September 1999. Customs and Excise has received a compliant version of its processing software and all non-compliant personal computers have been replaced. The National Systems Centre will be compliant by the end of September 1999. Finally, the payroll processing, check writing and examinations processing systems are all compliant. /1
1 See website: http:/www.tradeind.gov.tt
UNITED STATES /1
The Federal target date for Y2K conversion was set for June 30, 1999. In line with that deadline, contingency plans for the federal agencies were due June 15, 1999, and are being reviewed by the Office of Management and Budget. Most private sector industries are operating on a different time frame and their contingency planning processes will occur before the year 2000.
As a part of the federal contingency planning efforts, President Clinton's Y2K Council has established a coordination center to gather information on the operation of domestic and international systems during the transition to the year 2000. The Council is also encouraging key infrastructure industries to create their own national information centers to monitor events and share information with government entities and other industries during the date rollover.
In the case of the financial sector, roughly 96 percent of depository institutions and credit unions met the Federal June 30, 1999 target date for completion of remediation work and testing. /2 Moreover, on August 2, 1999, Federal bank, thrift, and credit union regulators announced that 99 percent of Federally insured financial institutions had completed testing of critical systems for Year 2000 readiness.
Federal financial services industry regulators have issued guidances and taken additional supervisory actions to ensure that industry participants prepare effective business resumption contingency plans. Most agencies set target dates on mid-1 999 for preparing such plans.
Every banking institution backed by the U.S. government has been visited by inspectors from the Federal Deposit Insurance Corp. (FDIC). After more than two years of close regulatory scrutiny, their exams show that more than 98 percent of all federally insured 3 institutions are prepared for Y2K. /3
The eight national securities exchanges and the National Association of Securities Dealers have finished implementation work on 72 percent of the mission-critical systems. Clearing Broker Dealers have successfully completed end-to-end testing and over 99 percent of the Federal Reserve's mission-critical applications are Y2K ready.
1. Information provided by the Department of the Treasury, based on information prepared for the G-7 Country Statement on the Year 2000 Problem, August and September, 1999.
2. See websites: http://www.y2k.gov , http://www.cnn.com/TECH/computing/9906/29/Y2k.atm.deadline/ , http://www.ffiec.gov/y2k
3. Statement by Dona Tanoue, Chairman of the Federal Deposit Insurance Corp., June 29, 1999.
An Inter-Ministerial Group was created on July 1998 in order to deal with the Y2K problem. This Group is composed by all the Ministries and chaired by the Director of the Office of Planning and Budget.
The financial sector conversion activities are the responsibility of the Central Bank of Uruguay. This institution has been supervising the evolution of computer system conversion in the financial sector since November 1997, based on the monthly progress reports it receives from banks.
In this sense, all financial entities, specifically banks, have achieved systems conversion and reached testing stages.
1. See website: http://www.opp.gub.uy and http://www.bcu.gub.uy/y2k
The Y2K issue in Venezuela has been addressed by the "Red Platino", a system which coordinates the activities of the Y2K Commission, formed by the Central Office of Statistics and Informatics, the Statistics Information System of Venezuela and all the Ministries.
An Institutional Action Plan, divided into several steps, was developed to deal with the implementation of a national conversion campaign and to promote Y2K awareness. This plan covers over 500 government institutions.
1. See web site: http://www.platino.gov
II. COMPARATIVE TABLES
III. FINAL REMARKS
In an environment of growing economic integration it is clear that the Y2K problem should be dealt with not only from a national, but also from a global perspective.' Hence, it is of the utmost importance that governments examine the actions that others have carried out, identifying the progress achieved in this respect. With this in mind, the present report complies and reviews the steps taken by the different countries in the Western Hemisphere to face the Y2K problem in their respective financial systems. It is very important to emphasize that this report does not intend to evaluate countries' performance; its objective is to gather the available information on the Y2K status and present it in a concise format.
The Y2K conversion has been a continuously evolving process that is increasingly accelerating as we approach the year 2000. Therefore, there may be a lag between the conversion results presented in this report and the present conversion status of the countries of the Western Hemisphere.
There are significant differences in the size and level of development of financial systems across the region. Hence, as was seen in the report, there is a wide range of measures adopted by different countries to deal with the conversion problem. It is important to point out that given the fact that not all countries in the hemisphere delivered the information requested, and that others only sent the information in a partial
2 manner, the quality of the self-assessments varies significantly form country to country.
If we use the information provided by the hemisphere's governments as a basis for discussion, there seems to be a tendency of countries with more developed financial systems to pay closer attention and gear more resources towards the Y2K problem.
After examining countries' individual assessments, the report grouped the Y2K efforts according to the coordinating entities, the action plans, the state of the financial sector, the contingency plans and the official estimated conclusion date. It was found that all countries established a national coordinating entity. However, the government organizations that formed the entities varied significantly between countries. In most cases, the coordinating entities designed an action plan divided into several stages. Almost nine countries have reached the testing stage, while eleven others are almost done with the converting stage. On the other hand, twenty-two countries consider the need to have contingency plans in order to face Y2K complications. Finally, most countries established Y2K conversion deadlines between June and September 1999, although the countries included in the report expect to complete all the phases of the process before the end of December.
In general, the Y2K has helped increase awareness across different sectors of society with respect to the importance of computing systems and the information technology industry. The effort to update systems and programs has not only served to correct the digital lecture of the year 2000, but has also created the incentives to improve actual computing systems, particularly in the financial sector.
It is worth remembering that there is still a high degree of uncertainty regarding the magnitude of the Y2K problem. In addition to the failures that the Y2K problem may cause, there is a psychological or "panic" effect that could also lead to economic and financial disruptions. To minimize this panic effect, it is important that, as we near the year 2000, financial institutions and government regulatory entities carry out the necessary steps to deal with the problem in a timely and correct manner. Thus, its is critical that information on the Y2K status is published adequately in order to enhance public confidence and reduce the risk of major disruptions.
1. Efforts to confront the Y2K problem have been made in the framework of international fora. For example, there is a Joint Year 2000 Council, that is sponsored by the Basel Committee on Banking Supervision, the Committee on Payment and Settlement Systems, the International Association of Insurance Supervisors and the International Organization of Securities Commissions.
2. individual country reports vary significantly despite the fact that the information provided was complemented with other resources.
LETTER SENT TO FINANCE MINISTRIES ON APRIL 26, 1999
Secretariat of Finance and Public Credit,
Ministry of Finance
Subject: Y2K Compiled Report
Dear Deputy Minister
As you are aware, the Year 2000 (Y2K) problem represents a serious challenge to our countries and, in particular, constitutes a threat to the adequate functioning of the financial sectors of the entire Hemisphere. These sectors are becoming more and more integrated and therefore the Y2K problem of a specific country is becoming a global issue. In this sense, efforts should be geared towards greater coordination between our countries regarding the Y2K.
With this in mind, we ask that you carry out a brief self-assessment of the Y2K conversion status (no more than five pages long) specifically of the financial sector of your country, emphasizing on the following issues:
Status of the Y2K conversion of systems and hardware.
Results on internal and external testing.
Current situation of contingency plans.
Remaining tasks to be carried out and the feasibility of completing them within the remaining time.
We urge you to complete and send this assessments no later than May 1st of the current year.
It is worth pointing out that Mexico will act as a coordinator for all this self assessments and will distribute to all member countries a compiled report.
Through this report, member countries will benefit from the exchange of information and if needed could receive technical assistance. Moreover, countries may wish to approach the World Bank infoDev program for support relating to the Y2K remedies and contingency plans. This can be done through contact Carlos Braga, Project Manager, tel. (202) 473-39-27, or George West, Senior Manager for the Y2K, tel. (202) 473-01-95. Additional support may also be available through the IADB.
If you have any further questions please do not hesitate to contact us through:
Raul Martinez-Ostos J.
Fax- (525) 228 2461
E-mail address: email@example.com
Fax- (525) 6876396
E-mail address: firstname.lastname@example.org
We look forward to your timely response.[Finance/tracker.htm]