WannaCry infected several thousand computers last week. This is the absolute biggest cyber attack in history, and it was actually stopped by a simple IT specialist who spotted an error, or else the damage could have been much more severe. This virus is a “ransomware” virus that blocks the user’s access to his computer until he sends money in exchange for a key supposed to give him back control.
Private individuals aren’t the only victims – businesses and institutions have been hit as well, even though one would expect them to operate reliable and secure computer systems. It is the case with several British hospitals, with French carmaker Renault, who stopped production in several plants to avoid the spread of the virus, with Spanish telecom group Telefonica, etc.
Banks have highly secured systems but, still, are they shielded from cyber attacks? Not at all, since Russia’s central bank has also been affected by WannaCry. Also, the European Banking Authority (EBA) is planning a test of cyber security measures of the European Union’s large banks, more and more targeted by large cyber attacks. The first mass cyber attack on a European bank dates to November, 2016 – it was on Tesco Bank, a subsidiary of the British supermarket chain, which fell victim of a hack that hit the accounts of 40,000 customers, 20,000 of which had money fraudulently withdrawn. In January, 2017, a “denial of service” attack targeted several large British banks, to the point where Lloyds Bank’s online services were unavailable for two days (The Guardian).
In its risk evaluation report of the European banking system of December, 2016, the EBA warned about the dangers of these cyber attacks (page 54):
“Cyber attacks are on the rise. While fraud attempts via online banking channels are relatively well understood, recent hackings of banking payment systems (e.g. attacks on the SWIFT system) illustrate that institutions are struggling to demonstrate their ability to cope with the rising threat of intruders gaining unauthorised access to their critical systems and data. Such an intrusion has potentially dramatic consequences and may result in system outages or even permanent data loss."
So we are facing a new risk for savers – cyber attacks that may lead to “permanent data loss”... in which case you’d have a hard time proving that you owned such or such an amount... And even SWIFT, the main network for banks throughout the world, isn’t free from attacks by malicious hackers. Banks are definitely no longer the sanctuaries they once were. Following the threats of draining bank accounts (BRRD, Sapin Law 2), cyber threats will make headlines in the years to come. This constitutes just one more reason – as if we needed one – to investigate the best way to preserve capital, and may we remind you that physical gold held in ultra-secure vaults outside the banking system eliminates those threats? A word to the wise...
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Philippe Herlin Finance Researcher / Doctor in Economics
Philippe Herlin is a researcher in finance and a doctor in economics of the Conservatoire National des Arts et Métiers in Paris. A proponent of extreme-risk thinkers like Benoît Mandelbrot and Nassim Taleb, and of the Austrian School of Economics, he will be bringing his own views on the actual crisis, the Eurozone, the public debts and the banking system. Having written a book on gold that has become a reference (L’or, un placement d’avenir, Eyrolles 2012), he wishes to see gold play a growing role in our economies, all the way to its full re-monetization.