Developing Country Central Banks of the Future as Cyber-Security Champions, Coordinators and Cheerleaders

The paper is a supplement to the Collection Data Privacy on CGAP.org and is related to the following CGAP Background Document: Cybersecurity Resource Centers for the Financial Sector: A Proposed Business Concept (July 2020).

Financial markets in developing and emerging countries are becoming increasingly attractive targets for cyber criminals as more developed countries strengthen their cyber defenses. The proliferation of digital financial services and increasing interconnectedness of financial systems and markets is exacerbating the threat that cyber attacks pose to financial sectors in developing countries as well as globally. Building strong cyber resilience is crucial for the stability of financial markets as well as for financial inclusion. Cyber attacks could chill financial inclusion efforts because, if successful, they could deter customers from adopting new financial products and services.

In most developing countries, there is no government agency that has been assigned or has assumed the responsibility for protecting the financial sector from cyber threats. Governments are setting up computer security incident response teams and similar structures, with a few already up and running, but two things are lacking: (1) national coordination and (2) technical capacity. This policy paper suggests that due to central banks’ unique institutional advantages, the central bank of the future could fill this oversight and coordination role, even if its regulatory scope is not expanded.

Disclaimer

This work was funded in whole or in part by CGAP. Unlike CGAP's official publications, it has not been peer reviewed or edited by CGAP, and any conclusions or viewpoints expressed are those of the authors, and they may or may not reflect the views of CGAP staff.