The price of failure is not something that traders like to contemplate, no matter how used to it they have become during the summer financial market crisis. But in the first weeks of 1999, they may be forced to confront failure on an unprecedented scale; the introduction of the euro could make it inevitable.
It will be failure through no fault of their own: not losses from unwise position-taking in emerging market bonds or equities, nor even through glitches in the new, euro-compatible computer systems they will be using. Trades will fail, leaving counterparties with unmatched positions, because of the misinformation that clients will mistakenly feed into the system. One senior banker calls it a "garbage in, garbage out" situation. "You can have the best systems in the world," he says. "But without the right instructions from the customer, deals won't settle." He adds: "What we'll control quite well is...
