British banks are appealing to the government for a "change over freeze" until after Year 2000 which will allow them to prioritise dealing with the millennium bug.
That also applies to wholesale European Monetary Union (EMU), they said, permitting dealing in Euro securities and inter-bank lending - but at the expense of retail or consumer EMU.
A parliamentary inquiry by the science and technology committee heard from the British Bankers? Association (BBA) that any future legislation or regulations demanding changes to IT systems should be judged by the extra burden.
Said Mike Young, BBA's assistant director asked whether this was merited because of the work they had to do before Jan 1, 1999.
?Year 2000 is crowding out the work of banks IT departments so there is no spare capacity to do other things,? said Young.
?The Financial Services Authority (FSA) and the government need to plan ahead to make sure that the small scale stuff which requires systems changes - like increases in monetary limits and the Consumer Credit Act - is not the straw that breaks the camel?s back. It is important to do an impact assessment - can it be done now or wait until we are over the hump of Year 2000,? he said.
Customer services are already on hold because of the massive resources needed to deal with the date change, which will cost #1 billion to put right, and the inevitable fact that the UK will have to trade with countries which joined EMU in the first wave.
?The slow development of telephone and PC banking for small business customers is because everyone is working on EMU and Year 2000,? he said.
Wholesale EMU has top priority because the majority of major corporates will want to be able to operate in London and the banks need to buy and sell Euro securities when the European countries join in the first wave, he said.
Retail EMU, which prepares for when the Euro replaces the Pound Sterling and Euro notes and coins are also introduced, can wait until after Year 2000 according to the BBA.
?We want clear signals from the government and a timetable for entry with a three year preparation period before the introduction of Euro currency because we are looking at a project like decimalisation,? said Young.
Tony Blair believes that the so-called millennium bug is ?the most serious problem facing British industry and the global economy today.?
Young was optimistic that in view of the PM?s statement the change over freeze will be accepted, but the committee?s clerk, Jessica Mulley, was giving nothing away: ?We are exploring how the UK addresses the millennium problem and we have a duty to report to the government which we will do in due course.?
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