The vast majority of European Union countries will close their financial markets on December 31 over concerns about the risks posed by the year 2000 computer problem, EU sources confirmed yesterday.
The decision follows an announcement earlier this year that the European Central Bank will shut down its TARGET system on December 31. TARGET handles interbank payments in euros so even if EU banks stay open, they will not be able to provide full services -- mainly, transfers between different bank accounts, which since January 1 this year place in euros.
The closings are triggered by concerns that the year 2000 problem could provoke widespread disruptions, stemming from the inability of many computer systems to process dates after December 31, 1999 due to the use of only two digits to indicate the year.
During an informal meeting in Dresden Saturday, EU finance ministers agreed, in order to facilitate the performance of end-of-year procedures and backup of all systems before midnight on December 31,1999, "Member States should ensure by appropriate means that the performance of any contractual obligations of credit institutions or other agents in the financial markets at least for the transactions in euros shall neither, as on a public holiday, become due nor enforceable on December 31, 1999."
For most of the 15 EU countries this means simply closing banks to avoid possible breakdowns. But during the meeting Finland and Denmark raised legal issues that prevent them from closing their banks. In Finland for example the year 2000 problem cannot be legally considered as an act of God, the only justification for closing banks other than for public and legal holidays. So in these countries banks will remain open, although not all services will be provided.