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Issuing a central bank digital currency (CBDC) requires adequate attention to security, the Bank for International Settlements (BIS) reminded<\/a> central bankers in a report on Nov. 29. An integrated risk-management framework should be in place starting at the research stage, and security should be designed into a CBDC, the report said.<\/p>\n The risks associated with CBDCs will vary across countries, as conditions and goals vary, and they will change over time, requiring continual management. These risks can be broken down into categories and a wide array of individual factors, the study demonstrated. The risks grow with the scale and complexity of the CBDC. In addition:<\/p>\n \u201cA key risk are [sic] the potential gaps in central banks\u2019 internal capabilities and skills. While many of the CBDC-related activities could in principle be outsourced, doing so requires adequate capacity to select and supervise vendors. [\u2026] A number of operating risks for CBDC stem from human error, inadequate definitions or incomplete planning.\u201d <\/p><\/blockquote>\n Cybersecurity may be challenged by other countries, hackers, users, vendors or insiders. The study identified 37 potential \u201ccyber security threat events\u201d from eight specific risks. Distributed ledger technology may be unfamiliar to a central bank and so not undergo full vetting or cause overdependence on third parties. <\/p>\n Related: Security audits \u2018not enough\u2019 as losses reach $1.5B in 2023, security professional says<\/a><\/em><\/strong><\/p>\n The study suggests an integrated risk management framework to mitigate CBDC risks.<\/p>\n Despite the limited use of CBDCs in real life so far, several examples of risk management failure can be found. China found it was unprepared for the data storage requirements after it launched its digital yuan pilot. The Eastern Caribbean Central Bank\u2019s DCash, a live CBDC, suffered a two-month outage<\/a> in early 2022 due to an expired certificate in the software. <\/p>\n The head of the Bank for International Settlements (@BIS_org<\/a>) has highlighted the need for vigilance and preparedness for the \u201cconstantly evolving\u201d security challenges facing central bank digital currencies (#CBDCs<\/a>) in a keynote speech https:\/\/t.co\/zo7UlQUOxg<\/a> #CBDC<\/a> #cybersecurity<\/a><\/p>\n \u2014 Global Government Fintech (@GlobeGovFintech) November 13, 2023<\/a><\/p><\/blockquote>\n On the other hand, the DCash pilot project had been considerably expanded the previous year to provide support in Saint Vincent and the Grenadines after a volcanic eruption there, improving the currency\u2019s resilience, the study reminded. <\/p>\n\n