Silence on Year 2000 SeenSpooking Global Markets

Governments and firms that fail to disclose their year- 2000 preparations risk losing investors, a top regulator said Friday.

In a speech to international bank supervisors gathered in London for a year-2000 summit, Federal Reserve Board Governor Roger W. Ferguson Jr. said lack of information "may feed negative perceptions" and cast a "shadow" on global markets.

"Financial market participants, and entire countries, may find that capital will become scarce, or at least dear, if they are not seen to be making sufficient progress," he said.

Mr. Ferguson, chairman of a year-2000 council sponsored by the Bank for International Settlements and other global organizations, said he is not among those who expect a year-2000-related recession. But he said recent turmoil in international capital markets shows that "a flight to liquidity can have severe repercussions in the real economy."

Mr. Ferguson also urged foreign regulators not to let current market stresses distract them from completing year-2000 preparations, though it "may seem like a somewhat arcane topic" right now.

He dismissed as absurd rumors that the year-2000 problem is a fabrication intended to draw attention and resources away from the euro. In fact, he said, how markets react to the euro conversion could be seen as a "leading indicator" of how well they will handle the year-2000 rollover.

- Scott Barancik