NEW YORK (MarketWatch) -- Federal officials on Wednesday urged banks and thrifts to be prepared in the event of a pandemic flu outbreak, because the critical functions they serve will need to continue even if large numbers of workers are absent from their jobs. The advisory from the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision was intended to raise awareness of what needs to be done ahead of an avian-flu epidemic in the United States. The illness already has infected, and in many cases, killed people in Asia, Africa, Europe and the Middle East. It is not known whether it would result in a pandemic.Still, "the widespread nature of this virus in birds and the possibility that it may mutate over time raise concerns that it will become transmissible among humans, with potentially devastating consequences," the advisory said.
On Monday, the International Monetary Fund advised central banks to have an adequate supply of cash notes and the ability to deliver them to financial institutions promptly so that banks can respond to surges in liquidity demands. To calm markets, financial regulators may need to consider a degree of prudential forbearance," the IMF said. "For instance, liquidity requirements, capital adequacy rules and provisioning requirements could be temporarily eased, and regulatory requirements could be adjusted for a 'work at home' environment." The advisory Wednesday also recommended that the private sector allow workers to do their jobs at home when possible; have a contingency plan to deliver goods and services; establish an infection-control policy; and create a support system by partnering with peers. A pandemic event is a potential threat to any financial institution regardless of size and location," according to the interagency statement.
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