Cyberattacks are the greatest threat to the world’s financial system, Federal Reserve Chairman Jerome Powell said in an interview with CBS News this week. Speaking to “60 Minutes” on Sunday (April 11), Powell said the risks posed by cybercriminals are greater than the lending and liquidity troubles that triggered the 2008 financial crisis.
“There are scenarios in which a large financial institution would lose the ability to track the payments that it’s making, where you would have a part of the financial system come to a halt, or perhaps even a broad part,” he said. “And so, we spend so much time and energy and money guarding against these things. There are cyberattacks every day on all major institutions now. That’s a big part of the threat picture in today’s world.”
By comparison, Powell said, the chance of a breakdown similar to 2008, “where you had banks making terrible loans … and having low levels of liquidity and weak capital positions and thus needing a government bailout” is “very low.”
Powell’s comments come following a highly active year for fraudsters, with the Federal Trade Commission reporting a 47 percent increase in fraud during 2020 thanks to a sharp increase of consumers living nearly wholly digital lifestyles.
“We’re also seeing more fraud rings and more sophisticated fraud happening, whether it’s going after governmental secrets to social engineering or just classic onboarding and attacking accounts and taking over accounts,” Kevin Trilli, chief product officer of Onfido, told PYMNTS in an interview in March.
And a recent report from the IC3, the FBI’s internet crime division, found that online fraud complaints rose by nearly 70 percent between 2019 and 2020, totaling $4.1 billion. That included extensive pandemic-related fraud involving the CARES Act and PPP loans, as well as schemes involving unemployment claims using false identities.
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