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Year 2000 Readiness of the Financial Industry in Japan:

Entering the Final Phase of Year 2000 Preparations

September 17, 1999
Bank of Japan

Introduction

Financial institutions and operators of private-sector payment and settlement systems in Japan have given Year 2000 preparations top priority and have been working diligently for a smooth transition to the year 2000. They have renovated and tested their computer systems, and have been making Year 2000 contingency plans to be prepared for possible Year 2000-related disruptions.

The Bank of Japan has been working on its computer systems and basic facilities, including the BOJ-NET (an on-line settlement system for funds and JGBs), to make them Year 2000 compliant. At the same time, the Bank has been promoting the Year 2000 preparations of financial institutions by issuing guidance papers, monitoring their Year 2000 readiness and giving advice to support their preparations through on-site targeted examinations and off-site monitoring. As for payment and settlement systems, the Bank has conducted six external tests of the BOJ-NET with private-sector payment and settlement systems since last December.

This report provides information on the Year 2000 readiness of both individual financial institutions and payment and settlement systems as of mid-1999.1 It describes (i) the results of the Year 2000 readiness survey of financial institutions with current accounts at the Bank of Japan in July this year, (ii) the Year 2000 readiness of key payment and settlement systems in Japan, and (iii) the results of external tests the Bank carried out jointly with payment and settlement systems.

As explained in the report, the Year 2000 preparations of the financial industry in Japan are on track overall. With less than four months before the year 2000, the focus of the financial industry's preparations is shifting from system-related preparations, such as renovation and testing, to non-system-related preparations for the transition period. These include drawing up and refining contingency plans and conducting drills to test them, as well as making staffing arrangements for the year 2000 transition and building mechanisms for information exchange between the relevant parties. The Bank of Japan is making sure that it is thoroughly prepared for the transition to the year 2000 by closely cooperating with market participants, the government, government agencies and various industry associations.

  1. The Bank of Japan published a report Year 2000 Readiness in the Financial Industry in Japan in August 1998, which describes the Year 2000 readiness of financial institutions as of mid-1998. The Bank has released various other publications on the Year 2000 readiness of the financial industry in Japan and the Bank's own preparations. These are available on the Bank's Web site. Please refer to Annex 2 for a list of these publications.

Table of Contents

Introduction

I. Results of the Survey of the Year 2000 Readiness of Financial Institutions

  1. A. Overview
  2. B. Organizational Awareness
  3. C. System-related issues
  4. D. Non-system-related issues
  5. E. Development of Contingency Plans
  6. F. Issues that Need to be Dealt with Judging from the Survey Results

II. Year 2000 Readiness of Major Payment and Settlement System in Japan

  1. A. Bank of Japan Systems
  2. B. Private-Sector Funds Transfer Systems
  3. C. Private-Sector Securities Settlement Systems

III. Results of the External Tests of the BOJ-NET

  1. A. Outline of the External Tests
  2. B. Test Plan and Test Results
  3. C. Planned External Tests
  1. Annex 1: Tables for Survey of Financial Institutions on their Year 2000 Preparations
  2. Annex 2: The Bank of Japan's Publications on the Year 2000 Problem
  3. Annex 3: Year 2000 Web sites