Outline of the Bank of Japan's Year 2000 Contingency Plan^*

Additional information on several key items

• This is the English translation of the original document in Japanese released on July 13, 1999.

July 30, 1999
Bank of Japan

• Introduction
• I. Information Center and Communication Arrangements
• II. Year 2000 External Test of the BOJ-NET on January 2, 2000
• III. Drills
• IV. General Approach to Business Continuity for Operations Performed by the BOJ-NET
• V. Moratorium on System Changes

For information, please contact:

Bank of Japan
Financial and Payment System Office

Tel: +81-3-3277-1133, 81-3-3277-2189

Budget and Management Office

Tel: +81-3-3277-2474

Introduction

In April this year, the Bank of Japan released the "Outline of the Bank of Japan's Year 2000 Contingency Plan" to provide information on the Bank's event management and business continuity arrangements for Year 2000-related contingencies. The Bank of Japan has been refining its Year 2000 contingency plan. This note provides additional information on several items of the plan which is considered particularly important to share with the Bank's relevant parties.

The Bank of Japan will continue providing the relevant parties with information on its Year 2000 contingency plan.

As for Year 2000-related liquidity preparations by financial institutions (e.g., their liquidity positions), the Bank believes that market participants' own efforts are essential. At the same time, the Bank keeps monitoring market situations closely and takes appropriate action where necessary.

I. Information Center and Communication Arrangements

On September 1, 1999, the Bank of Japan will organize the "Information Center" as an arrangement for information sharing and communication between center contact persons from each office and department of the Bank and the Secretariat of the Bank's Year 2000 Project (the Financial and Payment System Office and the Budget and Management Office). The Information Center will be set up as the physically located center between December 31, 1999 and January 4, 2000, the critical transition period for which a timely and accurate response to possible problems is essential. The Information Center will have staff on site on a 24-hour basis during this period.

The Information Center will gather and distribute information on the Year 2000-related situation within and outside the Bank to facilitate decision-making, coordination and communication of each office and department of the Bank. The Center will also function as the Bank's contact point on the Year 2000 problem with its counterpart centers in the government, foreign central banks and financial authorities, and international organizations. As for financial institutions that have current accounts at the Bank, their primary contact points are the relevant offices, departments or branches of the Bank.

To facilitate information exchange, the Bank of Japan will make a Year 2000 contact list. The list will be shared with parties with whom the Bank will need to maintain close communication in the period surrounding the rollover. These include financial institutions that have current accounts at the Bank, operators of private-sector payment and settlement systems, the government, foreign central banks and financial authorities, and international organizations. The Bank intends to complete the first edition of the contact list by the end of this August and will request the cooperation of relevant parties in making the contact list. The Bank will also consult with the relevant parties on means of communication and procedures for information exchange.

For Year 2000 critical dates other than the transition period, such as September 9, 1999 and February 29, 2000, the Information Center will monitor the status of the Bank's computer systems and facilities, private-sector payment and settlement systems, financial institutions with current accounts at the Bank, as well as the situation abroad, in cooperation with the Bank's offices, departments, branches and overseas representative offices.

The Bank of Japan will make necessary preparations to be able to communicate information about the Year 2000 status of the Bank itself and Japan's financial industry at any time, even during the first three days of the year 2000.¹ This will be done through its Web site and other means of communication.

1. December 31, January 1, 2 and 3 are normal bank holidays in Japan.

II. Year 2000 External Test of the BOJ-NET on January 2, 2000

A. Purpose

The purpose of the test is to confirm whether BOJ-NET terminals and equipment (including equipment at BOJ-NET users) can start up normally and to ensure the on-line connectivity of the entire network of the BOJ-NET in the year 2000.

B. Test Date

From 9:00 a.m. to noon on Sunday, January 2, 2000

The Bank of Japan makes the final decision on Saturday, January 1 whether or not to conduct the test on January 2, after examining the status with regard to the Year 2000 problem, including that related to public infrastructure. If the Bank decides that it is difficult or inappropriate to carry out the test, the Bank notifies test participants of its decision by the end of January 1.

Depending on how the test goes, the Bank may decide to extend the test hours or to carry out an additional test on January 3, 2000. The Bank notifies test participants of such decisions by the end of the test day.

C. Simulated Date

Tuesday, January 4, 2000

D. Test Participants

Notice of the test and registration form will be sent to the following parties:

1. (i) BOJ-NET users
   All on-line users;
   On-line users include BOJ-NET participants that interface with the BOJ-NET through terminals (i.e., "terminal users") as well as those that interface with the BOJ-NET via CPU-to-CPU linkage (i.e., "CPU-to-CPU interface users").
2. (ii) Private-sector payment and settlement systems
   1. a. payment and settlement systems that have an on-line interface with the Bank's computer systems -- Zengin system, Tokyo Clearing House, JBNet
   2. b. a payment and settlement system that does not have an on-line interface with the Bank's computer systems but is connected for settlement through the BOJ-NET -- Tokyo International Financial Futures Exchange

E.Test Menu

The test primarily verifies the on-line connectivity of the BOJ-NET network. Transmission of test data is optional between test participants.

For private-sector payment and settlement systems, the test confirms interlinked operations between their systems and the Bank's computer systems, including the BOJ-NET.

F.Test Results

The test results will be released on the day of the test.

III. Drills

The Bank of Japan will conduct Year 2000 drills to enhance its staff's familiarity with business continuity measures set out in the Year 2000 contingency plan and to increase the effectiveness of such measures. The drills will be performed for the following four areas: (i) manual procedures for business operations usually performed by computer systems; (ii) checking and operating procedures related to computer systems; (iii) checking and operating procedures related to the Bank's basic facilities; and (iv) communication procedures. Please refer to the attached table for information on the Year 2000 drills.

IV. General Approach to Business Continuity for Operations Performed by the BOJ-NET

The Bank of Japan has already implemented the Year 2000 compliant version of the BOJ-NET in January 1999. Through external tests conducted so far, the Bank has checked that the BOJ-NET is adequately prepared for operation in the year 2000.

Should BOJ-NET operations be disrupted, the Bank will perform the following four areas of BOJ-NET operations on a paper basis: (i) operations related to BOJ current accounts; (ii) operations related to BOJ-NET JGB Services (both the JGB registration system and the JGB book-entry system); (iii) operations related to the issuance of JGBs; and (iv) operations related to the settlement of payments of the Foreign Exchange Yen Clearing System. The following services are not available to participants in case of disruptions of the BOJ-NET because they are feasible only through the on-line system of the BOJ-NET: delivery-versus-payment (DVP) settlement of JGBs and corporate bonds; BOJ current account transfers based on transfer instructions with customer information; and debit transfers of BOJ current accounts.

Paper-based procedures in Year 2000 contingencies are in principle based on the existing paper-based procedures set out in user guides. In addition to the user guides, the Bank will prepare and distribute a checklist on paper-based procedures for the BOJ-NET to enable BOJ-NET users to check and confirm the flow of manual processing.

V. Moratorium on System Changes

The Bank of Japan will not make changes to hardware or software of its computer systems for implementation between October 1, 1999 and March 1, 2000, except in the case where changes to the computer systems are necessary and inevitable, such as emergency fixes to systems to address system failures. This moratorium on changes to computer systems is put into effect to avoid the risk of inadvertently making Year 2000 compliant systems non-compliant as a result of changes to the systems.

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(Attachment)

Outline and Schedule of the Year 2000 Drills