The Bermuda Monetary Authority (BMA) has urged Bermuda's financial institutions to review their information and other computer systems with regard to preparedness for the "millennium bug''.

The Authority has further urged that upon completion of that review, that firms prepare an action plan.

The warning comes a month after the BMA has completed its own internal review and restructuring on the compliancy issue after a year's work.

In a letter dispatched this week, the BMA said, "Much publicity has been given to the Year 2000 and the problems that it may present for many computer applications.

"It is important that every financial institution in Bermuda reviews its situation in regard to Year 2000 issues.'' The BMA also fired off copies of a paper prepared by the Basle Committee on Banking Supervision, the group that sets world banking supervision standards.

The report was prepared mainly for banks and banking supervisors, but has more general applications and usefulness, the Authority said.

The BMA's letter to financial institutions states: "Many will have begun this task already, but the Basle paper may be of assistance in identifying problem areas and in the management of the task. This Authority will wish to assess and discuss how each financial institution, for which it has supervisory responsibility, is preparing for the Year 2000 challenges in the course of its prudential meetings with institutions.'' The Basle report warns that failure to address this issue could lead to operational problems, bankruptcy and a disruption of financial markets.

BMA general manager, Malcolm Williams, noted that how Bermuda's financial institutions tackle the problem could have international ramifications long before the arrival of the new millennium.

He said, "I've already received a letter from a national bank in another country asking that the BMA confirm that the financial institutions here are Year 2000 compliant.'' He said yesterday, "We've been discussing this with the banks for some time and we know they and deposit companies have been working on this for a period of time. But we felt that it ought to go out in a formal way and we are also spreading it to the trust companies and others.

"Others we are interested in include deposit companies and the Bermuda Stock Exchange, and the Commodities Exchange, although that is so modern that the technology is likely to be fine. There's also the credit union. But there is much more to the system than just those for which we are primarily responsible.

"There is a lot of mutual fund management and administration, the insurance sector, and other areas for which this Authority is not directly responsible, but which needs to be addressed.

"For example, I expect that the Registrar of Companies is looking at the insurance side.

"Larger countries have larger problems, I'm sure. But Bermuda is so international and so linked with the larger jurisdictions, that it is not just what we do here, but what our customers do, as well.'' Mr. Williams indicated that the only remaining non-compliant aspect of the BMA's systems involve matters relating to exchange control. But he expressed disinterest in the expense of bringing that into compliance because of the abolishment of exchange control issues, which made such information redundant.