It is well understood that the threats and obstacles facing global finance have not disappeared with the COVID-19 outbreak. But while Brexit and the US-China trade conflict promise short-term disruption and long-term geopolitical realignment, it is cybercrime that poses the real existential threat to financial stability.
This is the result of a new study from the International Monetary Fund, which reveals that many financial institutions are still poorly prepared for the new wave of cybercrime.
“Given the strong financial and technological interconnections, a successful attack against a major financial institution, or against a central system or service used by many people, could quickly spread throughout the financial system, causing widespread disruption and a loss of confidence,” said IMF researcher Jennifer Elliott. and Nigel Jenkinson.
“Transactions could fail as liquidity is trapped and households and businesses could lose access to deposits and payments. In extreme scenarios, investors and depositors may demand their funds or attempt to cancel their accounts or other services and products they regularly use.
Cyberattacks have more than tripled over the past decade as hacking tools have become cheaper and more powerful, allowing unsophisticated attackers to cause more damage to financial institutions that are still struggling to catch up. their own systems.
“Individual business incentives to invest in protection are not enough; regulation and public policy intervention are needed to guard against underinvestment and protect the entire financial system from the consequences of an attack. In our view, many national financial systems are not yet ready to handle attacks, and international coordination is still weak,” the researchers said.
The researchers also called on institutions to improve their response capacity by ensuring they can resume operations in the face of a successful attack and to be more willing to share information with each other, potentially through an agreed-upon model at scale. worldwide.
“The COVID-19 crisis has highlighted the decisive role that connectivity plays in developing countries… As with any virus, the proliferation of cyberthreats in a given country makes the rest of the world less secure,” the researchers said .
The Morrison government has recently reported an escalation in cyberattacks by an unknown state actor (likely China), while Australia’s largest financial institutions have been repeatedly warned they are dragging their feet in the face of the threat.
