lv

Press Release of April 6, 1999

 

The Bank of Latvia experts audit information systems of the Bank of Latvia and those of credit institutions in order to establish whether, as regards computer systems, the banking system as a whole is ready to function in compliance with the year 2000 requirements. As you may already know, the year 2000 can cause problems for individual computer systems because not all computer manufacturers and software designers have developed their equipment and software so that their product would recognise the change of all four digits in the designation of the coming year. Some computers may display 1900 instead of 2000 or may fail to recognise the year 2000 as a leap year.

The Bank of Latvia has established a working group for co-ordinating solutions to the year 2000 problem. This working group is chaired by Mr. A. Sautins, Member of the Council of the Bank of Latvia. Mr. A. Sautins also represents the banking system in a similar working group established by the government of the Republic of Latvia and chaired by the Minister of Transport Mr. A. Gorbunovs.

The Bank of Latvia has carried out the relevant audits in about a dozen banks. In addition, the inspection of the systems owned by the Bank of Latvia is almost completed and the interbank sector is also under control. As yet, we have not discovered any serious problem that might prevent the Latvian banking system from functioning smoothly in 2000.

According to Mr. A. Sautins, it does not mean, however, that bank managers and information systems experts can now forget this matter; quite the contrary, they should proceed with comprehensive analysis and exchange of relevant. At a recent meeting of credit institution information systems managers, it was agreed that a chain of websites should be created for the purposes of information co-ordination.

The working group of the Bank of Latvia works on a continuous basis and summarises its findings at least once a month. Audit of all information systems, including purchased software, hardware and in-house developed systems and other equipment possibly affected by the year 2000 problem, such as switchboards, equipment for counting and examining money, bank security systems etc., is carried out both at the head office of the Bank of Latvia and its branches in Liepaja, Valmiera, Daugavpils and Rezekne. Each server and each personal computer have already been tested by special software in order to collect complete information about their readiness to function in 2000. As yet, no additional funds have been granted for such inspections, and the required changes and modifications are financed from the annual budget allocated for replacement of outdated equipment and software.

Each bank is or will be subject to similar audits, which are carried out on a continuous basis by the information experts of the respective credit institutions or by outside consultants. They also form part of general supervision performed by the Bank of Latvia, which reports its findings to the banks' management. Though each individual bank bears the prime responsibility for its technical preparedness, the Bank of Latvia will keep a close watch over the banks to make sure that they are ready to ensure undisrupted cash transactions on January 1, 2000 and beyond.

The Bank of Latvia and the Association of Latvian Commercial Banks firmly believe that any potential year 2000 computer problems will be detected and eliminated in all banks well ahead of time, as they have received methodological guidelines with valuable recommendations how to proceed. Successful solutions to the problem will ultimately depend on the bank managers' commitment and willingness to allocate the necessary funds.

Unfortunately, some banks may come to regard the year 2000 as a vehicle for establishing an unfair advantage over a competitor by generating undue interest in the ability of the latter to cope. Mr. T. Tverijons, President of the Association of Latvian Commercial Banks, has recommended that bankers take particular care to ensure undisrupted functioning of the ATMs by providing them with sufficient amounts of cash on the eve of the new year, as a shortage could be misconstrued and cause undue alarm.

To prevent any adverse effect of the year 2000 problem on the Latvian financial market, the Bank of Latvia will continue its co-operation with the Latvian Central Depository, the Riga Stock Exchange, the Securities Market Commission, the Insurance Supervision Inspection, as well as payment card centres.