New York Federal Reserve Bank President William McDonough said the year-2000 problem poses a major risk for world financial markets and, if botched, could hurt the world economy.

"Getting the year-2000 issue right is critical for every organization. Failure to get it right will affect the integrity of the payments system and the performance of the domestic, and maybe even the global, economy," he said in a speech Saturday to the Institute of International Finance in Hong Kong.

The New York Fed chief stressed that organizations cannot deny that any year-2000 problem exists or that institutions can address the issue by using only existing resources. Similarly, he cautioned firms not to leave the problem to outside suppliers or vendors.

"Bluntly stated, if your own management and staff or your correspondents and customers take any of the(se) positions, your organization may be at risk," he said.

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