BIS lays out steps for ‘secure and resilient’ CBDC systems

BIS says a cyber attack on “critical infrastructure” could threaten potential CBDC framework

article-image

Proxima Studio/Shutterstock modified by Blockworks

share

Research into safe and sustainable CBDC systems has continued apace, with the Bank of International Settlements on Friday outlining the agency’s latest steps to provide a “security and resilience framework” for them.

The idea behind the Bank of International Settlements’ paper, published on Friday, was to help banks safeguard against risks when it comes to CBDC implementation. 

The paper, dubbed Project Polaris, is designed to get ahead of CBDC launches and protect “critical infrastructure.”

While some central banks — such as Kenya — have said the once-promising allure of CBDCs has faded, other financial institutions, like the IMF, are receptive to possible adaptation.

While central banks largely have cyber security measures in place, the introduction and rollout of CBDCs could lead to new risks. While over 100 countries — including the UK and US — are currently exploring a potential CBDC, few have moved beyond small-stage, pilot projects and into actual implementation. 

“CBDC systems will need to remain highly resilient in a broad range of scenarios, including short-term (such as temporary system outages), ongoing situations (such as in areas without reliable internet, telecommunications connectivity or power), or civil contingency conditions (such as natural disasters or war), 9 besides being highly responsive in normal operations,” the BIS wrote.

Successful and safe implementation requires modernized technology to not only support a CBDC, but also to protect it, the agency found — echoed by other central banks.

Among the suggestions, Project Polaris pushed for central banks to hire a chief security officer (CSO). 

The CSO would then be able to have “regular” communication with counterparts across the globe, since CBDCs will require an international framework. There would also be an “incident response team” who could respond to a variety of potential scenarios.

It also urges central banks to consider other operators needed in a CBDC ecosystem, from commercial banks to merchant partners. This would lead up to the fulfillment of a resilience requirement — similar to a stress test — depending on the CBDCs “weakest link.”

Overall, frequent check-ups and assurances of secure technology are said to be key for any CBDC if central banks decide to deploy them.

“The framework could also help central banks assess their cyber security and resilience maturity level as it stands today as compared with what could be required when operating a CBDC system, by assessing and ranking how the organization adheres to the practices outlined in this framework,” the BIS wrote.

Project Polaris is not the first foray into CBDC research that the BIS has conducted. It put out another report in late June focused on how commercial banks could tokenize customer deposits.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million