Singapore's Financial Sector Ready for Y2K Over 99% of Financial Institutions Have Confirmed Y2K Readiness
MAS Confident that Financial Sector will Continue to Function Normally During Crossover
01 November 1999... The Monetary Authority of Singapore (MAS) today said that Singapore's financial sector is fully-prepared for Y2K, and expects the financial sector to continue to function normally during the crossover into the new millennium.
2 In an MAS press release issued today, the central bank said that the high level of readiness achieved by the financial sector was the result of a detailed and comprehensive Y2K programme implemented by the financial sector over the past four years. This involved extensive preparatory efforts by individual banks and financial institutions, as well as industry-wide tests on the financial infrastructure. MAS also worked closely with industry players and other relevant agencies to develop detailed contingency plans in the event of glitches during the Y2K crossover period.
EXTENSIVE PREPARATIONS AND TESTING
Preparations by Financial Institutions
3 To ensure that all banks and financial institutions were adequately prepared for Y2K well before the end of the year, MAS had specified strict time-lines for banks and financial institutions by which specific milestones had to be achieved. MAS also conducted examinations of banks and financial institutions to assess their state of Y2K preparations.
4 As at end-October 1999, over 99% of the 638 banks and financial institutions in Singapore have provided written assurances to the MAS that they are Y2K ready. Their chief executives have confirmed that they have taken all necessary steps to achieve Y2K compliance in their systems and operations which are critical to their business continuity crossing into Year 2000.
5 The Y2K assurances by banks and financial institutions in Singapore covered the following:
- all internal testing of systems in preparation for Y2K readiness have been successfully completed;
- all external testing with third parties to determine that the firm's systems have the appropriate interfaces with such third parties have been successfully completed;
- appropriate control measures in relation to Y2K-related risks posed by counterparties, customers, borrowers and clients have been put in place, and in particular, measures relating to the determination of liquidity requirements have been taken;
- adequate risk management mechanisms to control any risks relating to post-freeze changes made to the firm's systems which would affect the state of the firm's Y2K readiness and its ability to maintain adequate business continuity have been put in place;
- contingency plans to enable the firm to maintain adequate business continuity in the event that problems arise in its systems or in those of third parties on or after 1 January 2000 have been tested. These contingency plans, including fallback procedures and recovery arrangements, are ready and available to be invoked when the need arises.
6 Similarly, financial service providers and financial systems such as SES, SIMEX, NETS, ACH and SWIFT have carried out industry wide testing with participants from the financial sector to ensure that these systems are able to handle the Y2K date change without disruptions. On its part, MAS had also successfully tested the MAS Electronic Payment System (MEPS) and the MASNET to ensure that these systems will operate smoothly into the new year.
7 The financial sector has also worked closely with national infrastructure providers, such as the National Computer Board, Singapore Power and Singapore Telecommunications to ensure that the total operating environment remains resilient during the transition period.
DETAILED CONTINGENCY PLANNING
8 Besides the extensive Y2K preparations and testing, the financial sector has also prepared detailed contingency plans to deal with unexpected glitches.
9 As with any other breakdown or systems failure under normal circumstances, the financial sector will continue to give top priority to the quick detection and rectification of any electronic systems breakdowns during this period. The quick resolution of systems failures during this period, whether directly Y2K-related or otherwise, will minimise any inconvenience or disruption to the public and other users of financial services, thereby ensuring continued confidence in the Singapore financial system.
10 All financial institutions have therefore set up in-house operations centres to actively monitor the health of their internal systems as Y2K approaches. These operations centres will be manned round-the-clock during specific Y2K critical periods. MAS will also be increasing its monitoring of financial institutions' systems during these periods to ensure that any glitches get detected early and alternative solutions effected quickly.
11 The financial sector has also instituted a number of preventive measures that would help limit the extent of any potential disruptions during the crossover period. This includes the following steps:
- Introducing an MAS Y2K liquidity scheme to provide a contingency source of S$ funds to banks and finance companies facing temporary Y2K-related liquidity shortages. This will help to ensure the smooth functioning of Singapore's money market.
- Declaring 31 December 1999 a bank holiday to ensure that year-end backup processing activities by banks and financial institutions will be successfully completed by the last day of this year without any disruption.
- Reducing the volume of electronic transactions.
- Making adequate arrangements to deal with any increases in cash demands. The Board of Commissioners of Currency, Singapore (BCCS) and banks are fully prepared to deal with increased cash demands during this period.
12 "Singapore's financial sector is fully ready for Y2K. The public can feel assured that they need not take any special measures in preparation for the new year," said Mr Tharman Shanmugaratnam, MAS' Deputy Managing Director and Chairman of the Financial Sector Y2K Steering Committee.
13 "The industry has worked hard to ensure that its systems, individually and collectively, are able to see through the transition successfully. And in the unlikely event of any Y2K glitch, whether due to domestic or foreign events, the financial sector will be ready with prompt contingency plans to ensure that business continues as usual," said Mr Shanmugaratnam.
1 Third parties include the firm's financial service providers, suppliers, counterparties, customers, payment systems providers, credit card companies, clearing houses, exchanges, telecommunications carriers and common infrastructure utilities.