G20 safeguards vulnerabilities of digital economy, with financial sector focus

Posted in: Governance at 21/04/2017 21:38

The G20 can ensure a secure, resilient, sustainable and responsible digital economy, especially in the financial sector, by removing vulnerabilities in Internet infrastructure, encouraging cross-border cooperation, providing guidance to telecommunications regulators and implementing norms regarding cyber-attacks.

 


Challenge

 

The digital economy faces a significant, perhaps existential, challenge that could compromise G20 plans to promote inclusive growth. Given Internet vulnerabilities and inadequate security, actions by criminal or terrorist actors can immediately have cross border consequences. There have been many costly instances of denial of service, ransomware and hacking of financial institutions. Breaches in the financial sector and in private sector records are widely reported. Cyber operations targeting the availability or integrity of data of financial institutions could undermine the stability and trust in the financial system. Credential theft, malware currency manipulation, disk-wiping attacks (“Dark Seoul” and “man in the browser”), distributed denial of service attacks have required banks to take defensive and remedial measures costing millions. As more devices and more services being connected to the Internet, they are increasingly susceptible to mischief and cyberattacks which diminish trust and could ultimately cripple the Internet.

The challenge is to catalyze innovation and international cooperation to exploit the potential of the digital economy for inclusive global growth and development, to upgrade traditional industries, and facilitate the structural reform, to minimize risks to the financial sector and other infrastructure, and to ensure security in a way that promotes creativity.

 


Proposal

Summary

The German G20 presidency has set the themes for 2017 as “Resilience, Sustainability and Responsibility”. Digitalization (infrastructure and standards and norms) is highlighted as a priority focus. The Internet, the global cyberspace, and the digital economy have great potential to increase growth and productivity. Innovation in data and digital tech can transform the manufacturing, transportation, energy, and financial sectors. But the potential is threatened by weaknesses in the digital infrastructure, the instability of international protocol coordination and the lack of effective cross-border cooperation. There is inadequate international coordination on crime and security to establish norms to deal with cyber threats. To ensure the necessary trust in the Internet and global cyberspace, international cooperation is required. A priority is protection of the financial sector, the foundation of the economy.

The G20 can catalyze the necessary initiatives by invitations to G20 Ministers responsible for the Internet and global cyberspace, to the Financial Stability Board and others and to establish a G20 Working Group on the Digital Economy.

Rationale

Individual nations cannot provide for the necessary resilience and sustainability of the digital economy. International cooperation based on existing international law is the only avenue. We need modern day equivalents to standard railway track gauges, aircraft safety requirements, telephone standards, and the 1929 International Convention for the Suppression of Counterfeiting Currency. Leadership is required to improve network operator practices, to cope with the developing “Internet of Things”, to provide support for globally stable platforms for technical coordination and innovation, and to design global norms for cyber-attacks. However, despite the potential of the Internet, there are political pressures to “deglobalize”, the result being inward-looking national solutions to address global issues.

Focus on cyber-sovereignty, borders and government control should also be carefully handled in the framework of effective international cooperation so that it will not threaten to splinter the Internet into separate networks based on incompatible technology and regulations. E commerce needs a proper environment to reach its potential. A recent Internet Society survey reports that 45% of Americans had changed their online behaviour because of their fears. A 2014 Report estimated cyber- attacks cost the global economy $445 billion annually. The surveillance software industry appears to have “turned email theft into a terrifying — and lucrative — political weapon”. There have been calls for a software analogue to the 41 country Wassenaar Arrangement. The risk is a series of blunt and inefficient unilateral solutions that create residual damage, possibly larger damage than the problem to be solved.

To read more, go to:
www.g20-insights.org/policy_briefs/g20-safeguards-vulnerabilities-digital-economy-financial-sector-focus/

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