20 January 2020

POLITICO: Hack-proofing the EU’s banks

When European leaders, back in 2012, embarked on an ambitious plan to create a truly pan-continental financial system, they overlooked one important detail: how to protect it from cyberattacks.

Banks have remained closely tied to national governments, including in cases of financial stress, as the so-called banking union is only half-finished. And because the European Union’s cybersecurity authorities are national, banks are also in tight lockstep with their country’s security authorities.

With much of the debate focused on how to facilitate better cross-border banking, the security vulnerabilities emanating from an integrated financial system are hardly discussed. Some policymakers even worry that labeling the financial system as critical infrastructure would stall the banking union agenda.

Ignoring the cyber risks involved would be madness.

In fact, all major financial institutions are investing substantially in cybersecurity. And for good reason: Surveys indicate that the number of cyberattacks are increasing.

But under the current set up, the EU’s financial system is unprepared to respond to such an attack.

In the eurozone, the lack of security cooperation would also harm the provision of financial services, because a cyberattack that undermines trust in payments would immediately be a concern for all euro area countries. Just as money laundering and financial crimes are more than an embarrassment for the ECB, cyber vulnerabilities would threaten the entire common currency area.

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