On 3 November 1998 the European Central Bank (ECB) announced some decisions concerning the arrangements for the monitoring, in co-operation with the national central banks and some central banks outside the European Union, of the "changeover weekend". The changeover weekend is the period between the announcement of the conversion rates of the euro vis-à-vis the national currencies of the participating Member States, early in the afternoon of 31 December 1998, and the opening of financial markets in euro early in the morning of 4 January 1999. A large part of the final conversion operations for the transition of the banking and financial system to the euro will be concentrated over these few days.
The ECB herewith continues to report on the latest developments of this work, conducted with the assistance of the Changeover Weekend Committee, that comprises experts from the ECB and the national central banks of the participating countries.
The European System of Central Banks (ESCB) will monitor in particular the conversion of information technology systems, software, databases and other electronic records, especially inasmuch as they may have a bearing on the smooth launch of the single monetary policy.
The monitoring procedure is designed to detect at the earliest possible stage problems that may arise. If needed, the decision-making bodies of the ECB stand ready to take contingency measures.
The monitoring procedure will consist of two key components:
For the Eurosystem, (the ECB and the 11 national central banks) crucial points of the transition to the single currency (called "milestones"), the timely occurrence of which will be instrumental in implementing the full infrastructure of the ESCB on 4 January 1999, have been defined by the Changeover Weekend Committee. Such milestones will be monitored collectively. Intense testing of these crucial activities has been conducted during the past few months.
For the banking and financial sector, the Changeover Weekend Committee has given priority to a core group of institutions (payment and settlement systems, securities custodians and data providers), the smooth transition of which is a condition for the correct functioning of markets in euro and for monetary policy. The exact definition in each euro area Member State of this core group has been left to the national central banks.
The role of the national central banks will be to :
Ensure the direct monitoring of all financial institutions defined as belonging to the core infrastructure of the respective financial market;
Maintain particular vigilance with regard to national and international central securities depositories, global custodians and credit institutions acting as major correspondent banks in the euro area, located in their respective territories; and
Act as the contact point for such institutions, undertaking any action at the national level they may consider necessary, and proposing contingency measures at the European level, if and when necessary.
The national central banks have set up ad hoc arrangements with their respective national banking supervisory authorities and have been invited to consider appropriate links with other supervisory bodies.
The specific role of the European Central Bank will be to:
Organise the joint monitoring procedure across the euro area;
Gather information from and disseminate it to the national central banks;
Ensure the direct monitoring of the transition to the euro of a limited number of financial institutions of interest at the global and/or European level: the Euro Banking Association (Paris), S.W.I.F.T. (Brussels), Echo (London) and some major news agencies providing data to the financial industry; and
Keep informed its own decision-making bodies and providing any assistance which may be required to implement, if the need arose, the required contingency measures.
In addition, the ECB has established ad hoc contacts with the national central banks of the four non-participating countries, the other central banks of the G-10 countries and the Commission of the European Communities.
Through this network of contacts, the Governing Council of the ECB intends "to orchestrate the necessary policy responses to any unexpected events which may occur in the banking and financial industry during the changeover weekend", as announced in the ECB's press release of 3 November 1998.
Communication points for the collection and exchange of relevant information will operate at the ECB and at the national central banks from 9 a.m. to 8 p.m. every day during the changeover weekend. Each financial institution involved in the changeover process is expected to report to the relevant institution, according to the allocation of roles mentioned above.