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Fed Shifts Y2K Plans to Contingency

Friday, October 1, 1999

As 1999 begins to draw to a close, the Federal Reserve Bank of St. Louis is shifting its Y2K preparation from testing to contingency. Even though the banking industry is widely considered as well prepared as any for Y2K, said Jeff Dale, the St. Louis Fed's Century Date Change coordinator, contingency plans are necessary to guard against "something going wrong in spite of everything we did."

At the heart of these efforts is the creation of a Local Communication Center (LCC) at the St. Louis office and each of the three Branch offices. Each LCC will serve as a central hub in its respective part of the Eighth District to disseminate Y2K-related information and provide status updates to Fed staff, customers and the public. Most of the information communicated through the LCCs will be routine, but if the unexpected should happen, a full staff will be present to handle any scenario.

"If anything did happen, we have to be ready to handle any reaction from the public and supply them with realistic information," said the St. Louis Fed's Joe Elstner, who has been charged with tailoring the Bank's crisis communications plan to deal with every possible scenario that might take place. "We want people to be able to turn to us for correct information, instead of gossiping or speculating."

In terms of a liquidity response, the Fed has been encouraging financial institutions to set up borrowing arrangements early to fund their loan requests quickly (see related story in Regional Roundup section). The Fed has also taken steps to ensure that enough cash is available for financial institutions.

"Institutions will have to make sure they order enough funds and have more cash on hand than usual," said Jerry McGunnigle, assistant vice president in the St. Louis Fed's Cash Department. "We are already receiving extra shipments of new currency, and we are processing deposited currency as fast as possible so we can have as much as possible in our ready-to-pay inventory."

For more information on the Fed's Y2K contingency preparation, call Jeff Dale at (314) 444-8400.