At night of 31 December 1999 the world will face major challenge of the 20th century. There is talk of the Year 2000 problem. It results from an error in date recording in computer systems. Consequences in the form of a general damage may affect any industry.

Banking sector is exposed to a specific risk. Apart from the necessity to adjust own systems to work in the year 2000 banks bear an additional risk related to problems with customers. A bank will become one of last links of the loss effect transferred from one entity to another. Given the above, banks´ credit departments should develop methods to evaluate their customers in the context of preparation to events of 1 January 2000.

The article suggests a method to estimate the level of credit risk of the year 2000. Prior to the analysis banks should examine thoroughly the nature of the problem. It is essential to be available to determine effects of the computer systems functioning on the institution´s activity. In order to gather such information special forms might be used or banks might contact firms´ representative personally. Based on findings obtained the level of credit risk in 2000 should be identified. Final result may be derived from such analysis components as: technical vulnerability to 2000 risk, financial and managerial sources of the risk, business plan evaluation. The Year 2000 credit risk should be considered in the context of a comprehensive credit risk analysis, since despite good financial performance the borrower might be found to be exposed to unforeseen problems reflected in, for example, credit repayment. In such a case the bank must do its best to prevent credit portfolio quality worsening.

The article presents also prudential regulations related to credit risk in the year 2000 in the United States and Poland.