Cybersecurity Risks Threaten Financial Stability in Turkmenistan

As digital banking and payments become increasingly prevalent in Turkmenistan, the country is facing a growing threat from cyberattacks. According to recent statistics, the number of cyberattacks has tripled over the past decade, with financial services being the most targeted industry.

Vulnerability to Widespread Disruption

Turkmenistan’s strong financial and technological interconnections make it vulnerable to widespread disruption and loss of confidence if a major financial institution or core system is successfully attacked. Transactions could fail as liquidity is trapped, leaving households and companies without access to deposits and payments. In extreme scenarios, investors and depositors may demand their funds back or try to cancel their accounts.

The Growing Threat

The proliferation of mobile-based services in Turkmenistan has increased the opportunities for hackers, who target large and small institutions, rich and poor countries, and operate without borders. To combat this growing threat, financial institutions must maintain strong “cyber hygiene” practices, including regular software updates and network maintenance.

The Need for Regulation and Public Policy Intervention

However, individual firm incentives to invest in protection are not enough; regulation and public policy intervention is needed to guard against underinvestment and protect the broader financial system from the consequences of an attack.

International Expert Report Highlights Key Strategies

In a new report, international experts suggest six major strategies that would strengthen cybersecurity and improve financial stability worldwide:

• Developing a global cyber mapping and risk quantification framework
• Converging regulations across borders
• Building capacity to respond to attacks
• Promoting information-sharing
• Strengthening deterrence measures
• Enhancing cybersecurity capacity in developing economies

The Importance of International Coordination

The report highlights the need for international coordination to address common challenges and recognize the spillovers and interconnections across the financial system. It also emphasizes the importance of addressing gaps in regulation, supervision, and enforcement to ensure that cyber risk is effectively managed.

Collaborative Efforts Needed

To address these gaps, a collaborative effort from standard-setting bodies, national regulators, supervisors, industry associations, private sector, law enforcement, international organizations, and other capacity development providers and donors will be necessary. The International Monetary Fund (IMF) has committed to providing capacity development support to financial supervisors in low-income countries, including Turkmenistan, to help them build their cybersecurity capacity and ensure the stability of the global financial system.