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Date Posted: 09:43:21 12/31/99 Fri
Author: GF
Subject: Canadians Cash Out $1-Billion

Amount withdrawn from ATMs is small fraction
of money stockpiled for Y2K hoarding

SHAWN McCARTHY
Reuters News Agency.
Friday, December 31, 1999

Ottawa -- Canadians have withdrawn an extra $1-billion in cash from their bank accounts in anticipation of Year 2000 problems, but the Bank of Canada and the chartered banks say there is no evidence of widespread cash hoarding.

The central bank has stockpiled an additional $23-billion worth of $5, $10 and $20 notes in anticipation of a run on the banks from customers worried about the Y2K computer bug disrupting service or destroying records.

But as of late yesterday, the banks and trust companies had drawn down only $5-billion of that amount from Bank of Canada distribution centres around the country, and consumers had demanded an added $1-billion in cash above what they would usually require.

"That's pretty small change when you consider all the hype that has been going on about the Y2K," Bank of Canada spokesman Bill Cook said.

The central bank stepped up its order for bank notes earlier this year, and kept some bills in circulation that would normally have been destroyed. It will reduce that inventory over the next year or so by reducing its order for bills and pulling older notes out of circulation.

Bank of Canada Governor Gordon Thiessen has been advising people for months that the banks are fully prepared for the turn of the calendar to 2000. In its quarterly review published in August, the bank said it "fully expected that the financial sector will operate on a 'business as usual' basis heading into January 2000 and beyond."

At the same time, it signalled it would provide the additional $23-billion in cash reserves -- on top of $35-billion typically in circulation at this time of year -- just in case individual Canadians don't share its optimism.

The cautious types clearly don't.

At a Toronto-Dominion Bank teller machine in the shadow of Ottawa's Bank of Canada building, most customers were conducting their normal business, but some were taking precautions.

Anthony, a 32-year-old government worker who did not want his last name used, withdrew $300 from an automated teller machine and received updated statements for all of his accounts. He said he wanted enough cash to look after his parents for the weekend in case there was a problem with credit card or debit machines.

"I'm just a little nervous," he said as he shoved a wad of $20 bills into his pocket. "Anything is possible. You should always be prepared."

Up the street at Bank of Nova Scotia, Jean-Serge Denis took $200 from a machine. He said he was more worried that small retailers would face Y2K problems and took the cash as a precaution.

The Canadian Bankers' Association says its members have spent close to $1-billion testing and retesting their systems to ensure they can continue providing services such as ATMs, credit and debit cards, cheque clearing -- and charging interest.

CBA spokesman Bliss Baker insisted yesterday that Canadian consumers will not see a replay of the Y2K-related problems that plagued British retailers this week when they couldn't process credit card transactions because of a glitch in swiping machines.

Mr. Baker said the British problem was caused by a machine that is not used here. "We are absolutely certain that equipment is not in operation in Canada," he said.

He said Canadian banks have been working on the Y2K problem since 1995, when problems arose with the processing of five-year mortgages and guaranteed investment certificates. As a result, they are now viewed as the most prepared industry in Canada, which in turn is rated as one of the most Y2K-ready countries in the world.

Nor are problems from other countries expected to infect the Canadian financial system.

Mr. Cook said the majority of trading in the Canadian dollar is done in Canada and the United States, and the Bank of Canada is confident there will be no serious disruption to currency trading.

Reports from across the globe suggest a similar level of confidence among banks and their customers that the advent of the millennium will not cause breakdowns or a run on the banks for cash, though some Asian countries are ordering extended bank holidays to be safe.

In the United States, the top federal Y2K troubleshooter said there had not been "any noticeable increase in [cash] withdrawals."

European financial officials reported slightly higher than normal withdrawals, but said the banking systems could handle the load.

Even in China, where it was feared that jittery consumers would strain the country's financial system, banks reported they had not seen a Y2K rush.

[http://www.globetechnology.com/archive/gam/Y2K/19991231/RCASH.html]

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