The Hong Kong Monetary Authority (HKMA) will issue general guidelines for banks on solving the so-called millennium bug problem, the authority's deputy chief executive, David Carse, says. The millennium bug stems from computers programmed to read only two digits in the date for the year, instead of four. When 2000 arrives, some computers will automatically think it is the year zero. The HKMA said it was also planning to join forces with the Securities and Futures Commission (SFC), the stock exchange, the futures exchange and the Insurance Authority to monitor the issue. It is also planning to talk with the People's Bank of China (PBOC) and other Asian central banks on the issue. An HKMA survey released in January this year revealed that 46 per cent of banks in Hong Kong were unable to say when they planned to upgrade their computers to cope with the millennium problem. The survey revealed that only 29 per cent of banks had already taken action. Mr Carse said: 'The authority has reminded banks to deal with the problem by the end of 1998 in order to have more time to test their systems. 'If the HKMA discovers some banks are behind schedule in 1998, we will take more forceful action to urge them to comply.' He said the HKMA would check banks were on schedule by making on-site examinations. 'If banks tell us they will have solved the problem in 1999, and we discover it is not the case, the authority will issue stronger guidelines,' he said. Mr Carse said it would not be cheap for banks to deal with the bug. 'A bank in the UK spent GBP100 million (about HK$1.25 billion) solving the problem, while a bank in the United States paid US$200 million,' he said. 'It is going to affect banks' profits slightly but is not going to kill them.' Hongkong and Shanghai Bank's head of information, Bob Carlson, said the bank started to handle the problem 10 years ago. 'We have earmarked 2 per cent to 3 per cent of our development resources to address the year 2000 issue. 'We plan to make all our systems year 2000 compliant by mid-1998.'