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Curbing threats to payment systems a priority: Fed's Rosengren
[WASHINGTON] Attacks on electronic payment systems are a serious financial stability concern that requires public investment, and that the US Federal Reserve and other central banks should move to thwart, a top Fed official said on Friday.
Boston Fed President Eric Rosengren did not comment on monetary policy or the economy in a speech to the Basel committee on banking supervision.
Instead, he warned that central banks must be more proactive to protect the "many potential points of failure" in the complex landscape of payments.
Americans and US retailers can choose from an array of options, from credit and debit cards to newer services like PayPal and Google Wallet, to make and receive payment for goods and services.
Whether to steal or disrupt, hackers can take advantage of vulnerabilities in accounts of the customer, the merchant, the third-party provider, or the bank.
An attack "that renders consumers and businesses unable to transact business could be extremely disruptive and could possibly cripple an economy," Mr Rosengren said in prepared remarks.
"The adoption of a national defense grade security level, rather than a commercial grade security level, would mean a much more resilient, albeit expensive, payment system," he said.
Massive security breaches involving retailers such as Target Corp and Home Depot last year have raised awareness of the need to make payments safer. Earlier this week, the Fed launched a bid to work with banks and others in finance to improve the speed and safety of payments systems.
Mr Rosengren, who typically does not comment on cyber security but whose Fed bank ran a test on sharing cyber-threat information, called the overall effort a "national priority."
Payments breaches, he said, "contribute to the erosion of confidence in payment mechanisms and ultimately increase overall transaction costs."