The government is considering legislation to protect the banking system in the event of a major terrorist attack or computer virus outbreak.
A green paper, The financial system and major operational disruption, published this week by the Treasury, warns that a major catastrophe could threaten the whole financial infrastructure of the UK.
The institutions most at threat include the CHAPS and BACS payment and settlement systems, and the proposals reflect how critical banking IT systems have become.
"A payment system is the most basic and fundamental kind of financial infrastructure - without the transfer of money operating effectively few parts of the financial system will work well," said the green paper.
Any legislation would allow for a suspension of financial institutions' legal obligations to settle contracts until computer networks and physical infrastructure had been restored.
In the event of a terrorist attack, institutions would be able to "focus on restoration of operational networks in preparation for resumption of normal business, with less preoccupation with short-term financial pressures," the paper said.
Another hypothetical scenario in the green paper is that of a computer virus attack on banks, which hits shortly before the end of the month. This would prevent their business customers being able to pay their staff.
In this case, the government would force banks to stop direct debits from its retail customers accounts until the virus had been fixed and computer systems were able to process the payment of salaries.
Financial secretary Ruth Kelly MP said the impact of 11 September 2001 on financial services companies in the US had forced the government to consider legislation.
"Financial services play a vital role in the UK economy," she said. "This makes it particularly important to be sure that we have good arrangements in place to maintain the financial system's resilience during major operational disruption."
The paper is open for consultation until 16 April 2003. Its proposals could be adopted as part of a wider Civil Contingencies Bill, which covers all the UK's vital infrastructure.
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