24 June 1999

RBNZ brochure: What Happens to Banking Come Year 2000?

The Reserve Bank today issued a brochure entitled What Happens to Banking Come Year 2000?

The brochure has been prepared to reassure banks' depositors that the banking sector is well prepared for Year 2000 and, come the New Year, their money deposited in banks will be as safe as ever.

The brochure deals with five areas of potential concern. These are:
1. The security of bank records. The brochure says in fact all banks have back up computer tapes. Even if some computers temporarily malfunction, savings records will not be lost.
2. The risk of banks failing. The Reserve Bank is guaranteeing the liquidity of banks during this special period. This means that even if everyone tries to take out all their savings, no bank in New Zealand will fail due to the Y2000 problem.
3. The safety risks from taking out large amounts of cash. The concern is that people keeping substantial amounts of cash at home may be robbed or burgled.
4. Whether ATMs and Eftpos networks will work on 1 January. The brochure says absolute guarantees beforehand are impossible, but the odds of serious problems are very low.
5. Whether people will still be able to do their normal shopping. The brochure says the Reserve Bank has increased its reserves of bank notes by a huge margin. In addition, in the extreme and most unlikely situation that everybody tries to take out all their savings, the Reserve Bank will limit the amount of bank notes that it provides to banks day-by-day. This means that, come what may, the banks will have enough cash to meet people's ordinary needs up to and into the New Year.

Reserve Bank Deputy Governor Rod Carr commented: "The Reserve Bank is undertaking a public education programme about the implications of the Y2000 problem for the banking sector. We are laying out all the issues as explicitly as possible. This brochure is part of that programme.

"We are confident that the banking sector in New Zealand is well prepared for Y2000 and banking services in New Zealand will be operating normally in the New Year. By ensuring that the public understands this too, the risk of any upset in the normal relationship between the banking sector and its customers, especially in the last few weeks of 1999, will be markedly reduced," Dr Carr concluded.

For further information contact
Paul Jackman
Corporate Affairs Manager
Phone 04 471 3671, home 04 938 8177, pager 026 105 085,
Email jackmanp@rbnz.govt.nz