Fears of widespread disruption, cash shortages and economic upset as a result of Year 2000 problems may well come to nothing, according to new research from one of the world’s largest corporate finance institutions.
Merrill Lynch believes the risk of serious global economic dislocation is diminishing as more countries and large organisations get their houses in order.
Published earlier this month, the company’s latest report on the issue, Y2K: Bears, bulls or bugs, evaluates the progress of the corporate sector and the likely behaviour of companies and major investors late this year and early 2000.
The study is based on surveys of fund managers, fixed income investors, technology vendors and the public companies which are followed by Merrill Lynch’s research division.
International financial systems "look ready" for the changeover, thanks to close monitoring by regulatory agencies around the world, according to the report.
Of as much concern as bug related glitches is the fear that nervous investors could create a self-fulfilling prophecy by altering their investment behaviour on the basis of perceived concerns.
"The only macro-economic effect that most fund managers expect to see relates to fear of the bug and not to actual computer failures," the report noted.
Merrill Lynch economists and investors are predicting a build up of inventory in the fourth quarter of this year, as companies "indulge their fears and stockpile components."
A corresponding slowdown is expected in early 2000, as businesses work off these stockpiles.
Europe is up to six months behind the US in preparing for the changeover, with government agencies looking most susceptible to systems failure, the report claimed.
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