Wednesday, January 17, 2007

How A Bird Flu Pandemic Will Cripple The Banks Of England

Cash Chaos Predicted

This is an example of the fallout from a pandemic that few contemplate, but are obviously being taken extremely seriously by the financial institutions concerned.

You can shut down city centres, office blocks, theatres and schools, and people can confine themselves to their homes, or yards, during a pandemic outbreak to limit exposure to the virus, but if you can't get cash from your bank, and financial institutions are unable to process electronic transactions, then how will people get food to eat? Medicine?

From the UK Independent (excerpts) :

Thousands of people could be left literally penniless in the event of a flu pandemic as staff absences lead to a partial breakdown of Britain's cash distribution system, a report by Britain's financial watchdogs has warned.

The report follows a test of how Britain's financial system would cope in the event of an influenza pandemic, held by the Financial Services Authority, the Bank of England and the Treasury. The test, which ran for the six weeks between October 13 and November 24, warned absence rates at financial companies could top 60 per cent in some business units at the outbreak's worst point.

This would lead to bank branch closures and empty cash machines. The tripartite report also warned that some banks would not be able to replace expired cards - potentially leaving people with no access to money.

The report said: "Across the financial sector the heaviest impact of the (simulated) pandemic was upon the more labour-intensive parts, notably the provision of customer-facing retail financial services."

It warned of "bottlenecks" restricting the distribution of cash in some areas and said: "Growing staff shortages forced the high-street banks to close an increasing number of branches, which reduced the availability of retail banking services to the public, including ATMs."

On the issue of cards, the study said: "In relation to the use of debit and credit cards, some participants were able to extend expiry dates as a workaround to solve the difficulty of issuing new cards due to postal delays, but not all were able to do that." That could potentially leave some people without any access to money.

The regulators also raised fears over whether Britain's telecommunications system would be able to cope with large numbers of people working from home.

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