The assessment that a main cyber attack poses is a risk to monetary stability is axiomatic. The arena’s governments and agencies maintain to conflict to contain the danger because it stays uncertain who is in authority for defensive the system.

 Progressively concerned, key voices are sounding the alert. In February 2020, Christine Lagarde, president of the European Central Bank and former head of the International Monetary Fund, alerted that a cyber assault seem trigger a genuine monetary emergency.

 In April 2020, the Financial Stability Board (FSB) cautioned that “a major cyber occurrence, in case not legitimately contained, might truly disturb budgetary frameworks, counting basic budgetary framework, driving to broader budgetary steadiness suggestions.”

The potential financial costs of such occasions can be colossal and the harm to open believe and certainty critical.

Global financial system:

This risk is amplified by two current developments. First, the global financial system is undergoing a digital revolution unknown in history, and is being intensified by the Covid-19 pandemic. Banks compete with technology firms, and technology firms clash with banks.

Meanwhile, the pandemic has increased demand for online financial services and made working from home the new trend.

Central banks all over the world are considering promoting digital currencies and modernizing payment systems.

Second, malicious actors are using this digital revolution to pose an increasing threat to the global financial infrastructure, financial stability, and confidence in the system’s credibility.

The pandemic has also provided new opportunities for hackers. According to the Bank for International Settlements, the finance industry is facing the second-highest share of Covid-19-related cyber threats, behind only the health sector.

Suspect for risk?

Malicious players behind these attacks involve not only highly brazen perpetrators, such as the Carbanak squad, who stole more than $1 billion from financial institutions between 2013 and 2018, but also governments and state-sponsored attackers.

This is a global problem. Although high-income countries receive more coverage for cyber threats, the growing amount of attacks on softer targets in low- and lower-middle-income countries receives less attention.

However, it is in these countries where the drive for greater financial inclusion has been most intense, prompting many to migrate to digital financial services such as mobile payment systems.

While they help to improve financial inclusion, digital financial platforms also create a rich target area for hackers.

International strategy:

The Carnegie Endowment for International Peace published a paper titled “International Strategy to Better Defend the Global Financial System from Cyber Threats” in November 2020 to ensure more effective defense of the global financial system from cyber threats.

The study, created in partnership with the World Economic Forum, proposes concrete steps to minimize polarization by encouraging further collaboration, both globally and among government institutions, financial firms, and technology companies. The plan is based on 4 guiding principles:

More clarification on duties and obligations is needed. A few countries have effectively established domestic partnerships with their financial institutions, law enforcement, diplomats, other related government actors, and industry.

Present fragmentation stifles international collaboration and threatens the international system’s mutual resilience, rehabilitation, and reaction capabilities.

International cooperation is both necessary and urgent. Individual states, financial institutions, and technology businesses cannot adequately guard against cyber attacks if they act alone, given the size of the challenge and the system’s global interdependence.

Limiting fragmentation would expand capacity to resolve the problem. Many measures are in the works to help secure financial institutions, but they are also divided.

Any of these efforts overlap, increasing processing costs. Several of these projects have evolved to the point that they can be communicated, more organized, and internationalized.

Defending the international financial system will serve as a blueprint for other industries. Even when global pressures are high, the financial system is one of the few places where countries have a strong mutual interest in cooperating. Focusing on the financial sector is a good place to start, and it will pave the way for better security in other industries in the future.

The study suggests that the FSB create a basic structure for supervising cyber risk management at financial institutions as one of the steps for improving cyber resilience.

Governments and business should improve protection by exchanging vulnerability information and establishing financial computer emergency response teams (CERTs) modelled after Israel’s FinCERT.

Financial regulators

They can priorities growing the financial sector’s resilience to data and algorithm-based assaults. This can provide free, secured data vaulting, which enables participants to back up customer account data safely overnight. Daily models of cyber threats can be used to find flaws and build action plans.

The study suggests that policymakers explain how they can adapt international law to cyberspace and enhance norms to protect the credibility of the financial system in order to reinforce international norms. Sanctions, prosecutions, and asset seizures are also possible responses.

Governments can help these efforts by creating agencies to help with threat assessment and response coordination. Threats to the financial sector should be a priority of information collection, and policymakers should exchange that intelligence with partners and like-minded countries.

Increasing Capability

The holistic strategy outlined in the Carnegie report is dependent on developing the cybersecurity workforce, expanding the financial sector’s cybersecurity capability, and protecting financial inclusion gains made as a result of the digital transformation.

The pandemic’s increased unemployment offers a vital incentive for training and recruiting skilled people to improve the cybersecurity workforce. Firms in the financial services industry should invest in initiatives to develop the talent pool, such as high school, apprenticeship, and university programmer.

Creating cybersecurity capability entails concentrating on giving support where it is required. The IMF and other foreign organisations have received several requests from member countries for cybersecurity assistance.

G20 governments and central banks could establish an international framework to strengthen financial sector cybersecurity capability in collaboration with an international agency such as IMF.

The Organization for Economic Cooperation and Development and international financial institutions should include cybersecurity capacity-building in development assistance packages and substantially increase assistance to needy countries.

Finally, sustaining progress in financial inclusion necessitates increased cybersecurity. This is especially important in Africa, where many countries are undergoing major financial sector transformations as they broaden financial inclusion and shift to digital financial services.

A network of experts based specifically on cybersecurity in Africa should be created. The time has come for the international community — including governments, central banks, regulators, industry, and other related stakeholders — to join together to address this critical and urgent problem.

A well-thought-out plan, like the one being outlined above, serves as a road map for putting words into motion.