Cybersecurity Threats Call for a Global Response

Credit: International Telecommunication Union (ITU)

By David Lipton
WASHINGTON DC, Jan 14 2020 – Last March, Operation Taiex led to the arrest of the gang leader behind the Carbanak and Cobalt malware attacks on over 100 financial institutions worldwide.

This law enforcement operation included the Spanish national police, Europol, FBI, the Romanian, Moldovan, Belarusian, and Taiwanese authorities, as well as private cybersecurity companies. Investigators found out that hackers were operating in at least 15 countries.

We all know that money moves quickly around the world. As Operation Taiex shows, cybercrime is doing the same, becoming increasingly able to collaborate rapidly across borders.

To create a cyber-secure world, we must be as fast and globally integrated as the criminals. Facing a global threat with local resources will not be enough. Countries need to do more internally and internationally to coordinate their efforts.

How to best work together

To begin, the private sector offers many good examples of cooperation. The industry deserves credit for taking the lead in many areas—developing technical and risk management standards, convening information-sharing forums, and spending considerable resources.

International bodies, including the Group of 7 Cyber Experts group and the Basel Committee, are creating awareness and identifying sound practices for financial sector supervisors. This is important work.

But there is more to be done, especially if we take a global perspective. There are four areas where the international community can come together and boost the work being done at the national level:

First, we need to develop a greater understanding of the risks: the source and nature of threats and how they might impact financial stability. We need more data on threats and on the impact of successful attacks to better understand the risks.

Second, we need to improve collaboration on threat intelligence, incident reporting and best practices in resilience and response. Information sharing between the private and public sector needs to be improved—for example, by reducing barriers to banks reporting issues to financial supervisors and law enforcement.

Different public agencies within a country need to communicate seamlessly. And most challenging, information sharing between countries must improve.

Third, and related, regulatory approaches need to achieve greater consistency. Today, countries have different standards, regulations, and terminology. Reducing this inconsistency will facilitate more communication.

Finally, knowing that attacks will come, countries need to be ready for them. Crisis preparation and response protocols should be developed at both the national and cross-border level, so as to be able to respond and recover operations as soon as possible.

Crisis exercises have become crucial in building resilience and the ability to respond, by revealing gaps and weaknesses in processes and decision making.

Connecting the global dots
Because a cyberattack can come from anywhere in the world, or many places at once, crisis response protocols must be articulated within regions and globally.

That means the relevant authorities need to know “whom to call” during a crisis, in nearby and, ideally, also in faraway countries. For small or developing countries, this is a challenge that needs international attention.

Many rely on financial services or correspondent lines provided by global banks for financial connection. Developing cross-border response protocols will help countries understand their respective roles in a crisis and ensure a coordinated response in the event of a crisis.

The Group of 7 countries has made an excellent start at building collaboration on cybersecurity, but this effort needs to be broadened to each and every country.

Here the IMF can play an important role. With a much broader representation than most of the standard-setting institutions, the IMF has the ability to raise the concerns of emerging-market and developing countries to a global level.

Because any place is a good place to start an attack, it is in the ultimate interest of advanced economies to work with other countries to share information, coordinate actions, and build capacity.

At the IMF, we work with countries that need to build this capacity, developing the skills and expertise needed to recognize and effectively counter cybersecurity threats. Our international partners are doing the same, and we work regularly with an array of stakeholders in the public and private sector.

Successful cyber-attacks have the potential to hamper financial development by creating distrust, especially if personal and financial data are compromised.

If we want to reap the benefits of new technologies that can develop markets and expand financial inclusion, we have to preserve trust, and ensure the security of information and communications technologies.

With cybersecurity, there is always more to be done simply because the pace of change is breathtakingly fast.

*Prior to joining the IMF, David Lipton was Special Assistant to President Clinton, and served as Senior Director for International Economic Affairs at the National Economic Council and the National Security Council at the White House

IMFBlog is a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day.

The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.

Deep clean: How ‘blue finance’ can save our oceans

The world’s oceans are under siege. Wide ranging projects and innovative financing are needed to clean up the seas before it is too late. Photo: Francesco Ricciardi

By Ingrid van Wees
Jan 14 2020 (IPS-Partners)

Cleaning the world’s oceans and keeping them clean is a gargantuan task that will involve far-reaching projects backed by innovative forms of financing

The world’s oceans are running out of breath. In the past 50 years, we have lost nearly half our coral reefs and mangrove forests and the size of marine populations has halved. A third of global fish stocks are already depleted.

If trends continue, it is estimated that there will be no stocks left for commercial fishing by 2048 in the Asia-Pacific region alone. By 2052 oceans might contain more plastic than fish by weight and 90% of coral reefs may be lost.

The “blue economy”, which includes livelihoods and other economic benefits derived from oceans, is estimated at between $3 trillion to $6 trillion per year globally. Oceans contribute significantly to the gross domestic product of many developing countries—as much as 13% in Indonesia and 19% in Viet Nam.

Thirty-four million people in our region are engaged in commercial fishing. In Southeast Asia alone, the export value of the fish caught was $19.5 billion in 2015. But the cost of overfishing far exceeds this amount. Overfishing reduced the aggregate net benefit of global fisheries by $83 billion in 2012, with two-thirds of this loss occurring in Asia.

A ‘source to sea’ rescue plan

Saving our blighted oceans is a key development challenge, with the future viability of so many economies and livelihoods at stake. Clearly, the declining health of the world’s oceans is an issue that does not just affect a single industry, country or sector. It is a threat to the entire planet and all of its residents. The solution, therefore, must be broad and far-reaching as well.

This involves strategies that cut across multiple sectors and countries of the region in a holistic, “source to sea” approach. Governments, NGOs, businesses and other stakeholders all need to do their part. This includes reducing marine pollution at the source while protecting and restoring coastal and marine ecosystems and rivers.

Alternative livelihood and business opportunities need to be created. Port and coastal infrastructure is overdue for modernization. There’s an urgent need for ocean-friendly infrastructure including integrated solid waste management, ecologically-sensitive port facilities, and municipal and industrial wastewater and effluent treatment. Equally crucial are sustainable agribusinesses that reduce runoff of fertilizers, agrochemicals, waste, and soil erosion, as well as a sustainable aquaculture sector.

Attracting the scale of finance needed

The key challenge to implementing these far-reaching solutions is financing. Large-scale investments are required to support these projects and the private sector is the only source with the vast financial resources needed. However, attracting private investors can be tricky for ocean health-related projects.

The private sector needs a return on its investment which is usually achieved through charges to a ‘user’ base, either a beneficiary or a polluter. As with other global public goods however, it’s often impossible to ascribe direct charges for a project (such as those addressing coastal erosion) given the lack of an identified ‘user’ base. Moreover, when user charges can be applied, their level is constrained by affordability considerations, such as in municipal wastewater projects. This results in a volatile or at least uncertain revenue model, compromising bankability and constraining the flows of private capital.

“Blue funds” have huge potential to help overcome these challenges. Arranged by governments or development finance institutions, they could provide much-needed credit enhancement to projects in the form of ‘blue credits’. These credits are similar to carbon credits as they provide revenue support based on the value of the avoided costs from doing a high impact project. Such funds could also support issuance by underlying project sponsors of more creditworthy blue bonds to raise competitive long-term capital from the markets.

Multilateral development banks can help by developing blue project selection criteria and policy frameworks, creating financial instruments and products, blue funds or similar financial mechanisms, mobilizing concessional finance, and preparing bankable project pipelines.

Green financing has already beaten a path for blue financing to follow. Green instruments aim to pool projects together to diversify risks and enable wider access to financing by tapping the capital markets through green equities and bonds. By enhancing the bankability of a project, these instruments can encourage a scaling up of investments in renewable energy, reforestation, watershed management, air quality, and clean transport.

Blue finance investments can make the difference

ADB has issued $2.2 billion of Green Bonds since 2010. With additional support, blue investments can be similarly successful. Given the urgency and scale of the problem, these investments need to gain traction rapidly. They are not yet well understood and currently perceived as slow and risky, so it may take decades to realize, verify, and capitalize on conservation benefits.

But there is hope that it won’t take long. Blue funds offer an avenue to work with governments to improve the risk-return profiles of projects and structure pooled investment products that can unlock private capital. For blue finance to become mainstream, governments and the general public need to be convinced of the urgency of financing projects that support ocean health. Development partners like ADB can help quantify the real costs and benefits of blue investments for both governments and the private sector. As these benefits are better understood, we expect more willingness to finance the related costs.

The local knowledge of development organizations, as well as their strong relationships with national and municipal governments and other development partners, will be critical to ensuring that the right blue investments are made in the region. This is why ADB has launched a new Action Plan for Healthy Oceans and Sustainable Blue Economies.

Deep-cleaning our oceans is a massive undertaking, and the price tag will be similarly large. Blue finance offers a way to share the funding of these initiatives. However, we must act now, while there is still time.

This story was originally published by ADB-Asian Development Blog

Was China Manipulating Its Currency?

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jan 14 2020 - Many argue that China’s impressive growth for last four decades has been due to deliberate exchange rate undervaluation, promoting exports and discouraging imports. In August [...] Read more »

Has China Been Manipulating Its Currency?

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jan 14 2020 - Many argue that China’s impressive growth for last four decades has been due to deliberate exchange rate undervaluation, promoting exports and discouraging imports. Last year, [...] Read more »