THE International Monetary Fund said that the global banking system could lose about $350 billion to cyber-attacks. IMF Managing Director, Christine Lagarde disclosed this while making the call for better regulation of the banking system as a requirement for building a safer, more sustainable and ethically sound financial sector.
Speaking in London on Thursday while delivering in a paper titled: “The Financial Sector: Redefining a Broader Sense of Purpose, delivered at the 32nd World Traders’ Tacitus Lecture, Largade noted that a better financial sector is more important than ever to help deliver on what our 21 century so badly needs namely higher employment, greener growth, and good living standards for all.
She said: “ The key to achieving this goal is to reshape finance into something that is more aligned with societal values and more connected to the interests of all stakeholders: from customers, to workers, to shareholders, to local communities and future generations.” Speaking further, she asserted that the task of making the finance sector safer and more trustworthy requires combination of good innovation, better regulation, and a broader sense of responsibility.
Elaborating on the need for better regulation, Largade said: “We need further efforts to address the potential dangers of “too-big-to-fail” as banks become even bigger and more complex. In the United States, for example, the top five banks now hold about 45 percent of total banking assets, compared with about 40 percent in 2007.
“Meanwhile, leading economists and industry experts have been calling for further increases in equity funding—beyond the current capital requirements—to ensure that banks can withstand a potential storm. “Others are not so sure—because further increases in equity funding might come with negative side-effects, such as reduced lending. So far, the evidence points to relatively small costs of higher capital.
“Above all, we must be concerned about increasing efforts to roll back some post-crisis regulations. Countries need to resist these pressures. Indeed, they need to push on because more work and political will are required to fully implement the existing reforms. “And even as policymakers are still internalizing the lessons from the last crisis, they need to be vigilant about new risks. For example, the IMF has recently estimated that cyber-attacks could potentially lead to net income losses in the global banking system of up to $350 billion.
“Or think of a sharp adjustment in asset prices that could affect the fast-growing shadow banking sector. That part of the financial world comes with many regulatory blind spots that should be addressed. For instance, we believe that countries need to regulate underwriting standards in high-risk debt markets, including leveraged loans. “Of course, making finance safer and more trustworthy is not just about good innovation and better regulation. It is also about a broader sense of individual and collective responsibility.”
https://www.vanguardngr.com/2019/03/banks-risk-350bn-loss-to-cyber-attacks-imf
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