Bank Indonesia has Rp 96t in cash ready to counter Y2K bug

JAKARTA (JP): Bank Indonesia deputy governor Aulia Pohan said on Wednesday the central bank was ready with some Rp 96 trillion (US$13.52 billion) in cash to anticipate a possible huge cash demand before the Year 2000 (Y2K) computer bug is predicted to strike.

Pohan said the Y2K World Committee required all central banks to increase their cash supplies as part of the contingency plan to deal with Y2K.

"The normal cash supply here is around Rp 19.1 trillion (per month), but because of the Y2K (threat) the international committee required a cash supply five times the normal level, or around Rp 96 trillion."

He said Bank Indonesia held some Rp 70 trillion as of November, and the remaining amount would be made available within two weeks.

Pohan said the cash supply included the recently issued Rp 100,000 banknote.

He did not disclose the amount of the new banknotes which would be put into circulation, but Bank Indonesia said recently that it intended to print up to Rp 50 trillion of the new notes before the new year.

Pohan stressed the cash supply would not spark inflation as it would only be supplied according to the size of demand.

The Y2K bug stems from computer programs which use only two digits to denote the year. Older computer could mistake 2000 for 1900 and crash at the beginning of next year.

Computers which are not Y2K-compliant could fail and disrupt the banking system.

Many fear the Y2K bug would cause computers in banks to crash, cutting out service of ATMs and paralyzing banking transactions.

Pohan reiterated that the country's banking system was ready to tackle any problems thrown up by what is dubbed the millennium bug.

He explained that domestic banks carried out both national and international tests to ensure they will continue to work when the date changes to Jan. 1, 2000.

He said that of the country's 167 banks, only 20 banks used sophisticated banking technology, while the remaining 147 banks used nonintegrated "local area network" or a personal computer stand alone system which is less susceptible to the Y2K bug.

He said 20 large banks were already Y2K compliant, while the remaining banks would complete an end-to-end test to check for their contingency plans or that they met minimum requirements.

"We have prepared the minimum requirements which meet international standards," Pohan said.

"We are ready to face even the worst-case scenario."

Pohan appealed to the public not to panic, urging them to refrain from withdrawing huge amounts of money beyond their immediate needs.

"Your money is safer kept in the bank," he said.

Pohan said that demands for cash would increase this month, but he believed it would be due to Christmas and year-end celebrations.

He noted the fasting month of Ramadhan also occurred during December.

Pohan said there were already indications of higher cash demand, shown by the slight increase in the amount of currency in circulation, from Rp 47.5 trillion in October to Rp 48.4 trillion in November. (rei)