Protecting the Global Financial System from Cyber Threats
The Growing Risk of Cyber Threats to the Global Financial System
The global financial system is facing a growing risk of cyber threats due to rapid innovation, competition, and the pandemic fueling the digital revolution. Efforts to harden defenses and toughen regulation are important but not enough to outpace growing risks.
The Collective Action Problem
A collective action problem exists among governments, financial authorities, industry, and tech companies in organizing the system’s protection. This disconnect between finance, national security, and diplomatic communities is pronounced, with tenuous relationships between financial authorities and national security agencies.
An International Strategy to Protect the Global Financial System
To address this challenge, an international strategy recommends specific actions to reduce fragmentation by fostering more collaboration among government agencies, financial firms, and tech companies. The strategy is based on four key principles:
Key Principles
- Greater Clarity about Roles and Responsibilities: Governments, financial authorities, industry, and tech companies must clarify their roles and responsibilities in protecting the global financial system.
- International Collaboration: International collaboration is necessary and urgent to address the growing risk of cyber threats.
- Reducing Fragmentation: Reducing fragmentation will free up capacity to tackle the problem and improve cooperation among stakeholders.
- Protecting the International Financial System: Protecting the international financial system can be a model for other sectors.
Reinforcing International Norms
Governments should make clear how they will apply international law to cyberspace and strengthen norms to protect the integrity of the financial system. This requires a comprehensive strategy that includes building the cybersecurity workforce, expanding the financial sector’s cybersecurity capacity, and safeguarding gains in financial inclusion.
Recommendations
- Building the Cybersecurity Workforce: Governments, industry, and tech companies must invest in building a robust cybersecurity workforce to address the growing risk of cyber threats.
- Expanding Cybersecurity Capacity: The financial sector must expand its cybersecurity capacity to protect against cyber threats.
- Safeguarding Gains in Financial Inclusion: Efforts should be made to safeguard gains in financial inclusion that have resulted from the digital transformation.
By implementing this international strategy, we can reduce fragmentation and improve cooperation among stakeholders to better protect the global financial system against cyber threats.