How secured are you when your peer Bank is under a Cyber Attack?

Cyber Security in Payment NetworkAccording to a research report from the Federal Bank of New York, a cyber attack on a major US bank could have significant spillovers to investors, creditors, and the whole financial system.

The report models how a cyberattack on a single large bank, a group of smaller banks or a common service provider can be transmitted through the wholesale payments network, taking the example of the U.S. financial system.

The researchers estimate that a hit on any of the big five banks would affect more than a third of the assets in the whole network

The extent of the amplification would be even greater if banks respond strategically, which, the authors argue, they are likely to do if there is uncertainty about the attack. Liquidity hoarding would have a dramatic impact on forgone payment activity, reaching more than 2.5 times daily GDP.

“High-value payment and settlement systems may be a natural candidate for a malicious attacker intent on inflicting the largest possible damage to the financial system and the broader economy,” says the paper.

Read the entire report here


Authors:

Thomas M. Eisenbach, Anna Kovner, and Michael Junho Lee
Federal Reserve Bank of New York Staff Reports, no. 909

Source:

finextra.com

News Reporter

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