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April 22, 1999
Web posted at: 2:15 p.m. EDT (1815 GMT)

by Elizabeth de Bony

BRUSSELS (IDG) -- The vast majority of European Union (EU) countries will close their financial markets Dec. 31 over concerns about the risks posed by the year 2000 computer problem, EU sources confirmed today.

The decision follows an announcement earlier this year that the European Central Bank will shut down its Target system, which handles interbank payments in euros, on Dec. 31. So even if EU banks stay open, they won't be able to provide full services -- mainly, transfers between bank accounts, which since Jan. 1 this year are conducted in euros.

The closings are triggered by concerns that the year 2000 problem could provoke widespread disruptions stemming from the inability of many computer systems to properly process dates after Dec. 31, 1999, because of the use of only two digits to indicate the year.

During an informal meeting in Dresden, Germany, Saturday, EU finance ministers agreed that in order to facilitate the performance of end-of-year procedures and backup of all systems before midnight Dec. 31, 1999, "member states should ensure by appropriate means that the performance of any contractual obligations of credit institutions or other agents in the financial markets at least for the transactions in euros shall neither, as on a public holiday, become due nor enforceable on Dec. 31, 1999."

For most of the 15 EU countries that means simply closing banks to avoid possible breakdowns.

But during the meeting, Finland and Denmark raised legal issues that prevent them from closing their banks. In Finland, for example, the year 2000 problem can't be legally considered "an act of God," the only justification for closing banks other than for public and legal holidays. So in these countries, banks will remain open, although not all services will be provided.