TOKYO -- A Japanese government watchdog agency is threatening to punish financial institutions which fail to prepare adequately for the so-called millennium computer bug problem.
The Financial Supervisory Agency will penalize banks and other financial companies that cause problems for their customers due to computer trouble stemming from the switch from 1999 to 2000, an agency official said Wednesday.
Firms which fail to comply with an agency schedule for preparing for the millennium, or Y2K, bug may also face punishment, said the official, who declined to be named.
Computer experts have warned that computers which refer to only the last two digits of a year may be unable to distinguish between 2000 and 1900, something which could trigger system crashes or create erroneous data.
Hoping to spur Japan's financial institutions to speed up efforts to deal with the bug, the FSA is threatening to suspend operations of industry laggards for an indefinite period of time, the official said.
Nearly all Japanese banks and credit unions share the same interbank system that handles domestic and corporate fund transactions. So financial authorities fear one weak link in the chain could lead to disruptions throughout the country.
Also Wednesday, the Federation of Bankers Association of Japan said its member banks and experts have begun discussing ways to establish a backup system that would prevent individual bank's problems with the Y2K bug from affecting the entire system.
The FSA said that as of December, nearly half of the top 19 Japanese banks had completed needed updates for just a quarter of their main computer systems. Only two banks had updated more than 75 percent of their systems.
Japanese financial institutions were recently required to submit quarterly reports to the FSA detailing their progress in preparing for Jan. 1, 2000.
In September, a special task force set up by Prime Minister Keizo Obuchi issued a report urging large companies to test their readiness for the potential turn-of-the-century crisis by staging mock exercises no later than June 1999.