IMF Sounds Alarm on Web3’s Promise of a New Financial System
- The IMF warns of the growing cyber threats to the global financial system.
- The global financial system is undergoing an unprecedented digital transformation, accelerated by the COVID-19 pandemic.
- Central banks around the globe are considering digital currencies and modernizing payment systems.
- Around 100 countries are exploring Central Bank Digital Currencies (CBDCs) at various levels.
The Growing Cyber Threat
The International Monetary Fund (IMF) has raised concerns about the increasing cyber threats to the global financial system. In 2016, hackers targeted the central bank of Bangladesh, exploiting vulnerabilities in SWIFT, the global financial system’s main electronic payment messaging system. This incident served as a wake-up call for the finance world that systemic cyber risks in the financial system had been severely underestimated.
Digital Transformation and CBDCs
The global financial system is undergoing an unprecedented digital transformation, which is being accelerated by the COVID-19 pandemic. Central banks around the globe are considering throwing their weight behind digital currencies and modernizing payment systems. This transformation is not without its risks. Malicious actors are taking advantage of this digital transformation and pose a growing threat to the global financial system, financial stability, and confidence in the integrity of the system.
“A major cyber incident, if not properly contained, could seriously disrupt financial systems, including critical financial infrastructure, leading to broader financial stability implications”.
Christine Lagarde
Major Cyber Incidents
Christine Lagarde, president of the European Central Bank and former head of the International Monetary Fund, warned that a cyberattack could trigger a serious financial crisis. The Financial Stability Board (FSB) also warned that “a major cyber incident, if not properly contained, could seriously disrupt financial systems, including critical financial infrastructure, leading to broader financial stability implications”.
The Rise of CBDCs
We are now witnessing a significant move towards Central Bank Digital Currencies (CBDCs), driven by the ingenuity of central banks. Around 100 countries are exploring CBDCs at one level or another, with some researching, some testing, and a few already distributing CBDC to the public. If designed prudently, CBDCs can potentially offer more resilience, more safety, greater availability, and lower costs than private forms of digital money.
© Cryptopress. For informational purposes only, not offered as advice of any kind.
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