On July 7, the Bank for International Settlements (BIS), an organisation owned by central banks, released a robust strategy to shield central bank digital currencies (CBDCs) from cyber threats. Those who have been tracking the surge of smart contract breaches and the resulting loss of significant value in DeFi will acknowledge the potential security challenges that CBDC systems could pose.
Security frameworks penned by the BIS aim to safeguard the confidentiality, integrity, and availability of CBDC transactions. These digital currencies are designed to be adaptable, responding to unpredicted spikes in transaction volumes, have no single points heaving under pressure, to operate continually, even where the underlying financial institution fails.
To organise the identified control objectives tailored to CBDC systems, the BIS framework includes seven steps: Preparation, Identification, Protection, Detection, Response, Recovery, and Adaptation. These processes translate into over a hundred control objectives. Among these are 24/7 transaction monitoring, execution pending due diligence on the security of cryptographic keys, and implication of a DDoS protection service.
To execute this framework, BIS suggests establishing a central bank senior leadership and board, a chief security officer, and numerous information technology, security, and stakeholder teams. While recognising the risks embedded in decentralised finance (DeFi), the BIS adamantly supports CBDC adoption. The institution released a unified-ledger proposal for cross-border and tokenised-asset transactions and has successfully concluded a distributed ledger technology project with the Bank of England.
However, it is essential to be aware of the other side of the coin. The implementation of such an extensive framework will require substantial resources, both human and financial. Moreover, critics are bound to question the centralisation of control in a space built upon decentralisation principles, arguing that such strategies could undermine the very foundation of these currencies.
Therefore, while the BIS framework makes a strong case for securing CBDCs’ future, it behoves the blockchain community, regulators, and financial institutions to probe further into how such objectives can be accomplished without compromising core tenets or overburdening the system’s functionality. The tug of war between security and decentralisation adds another layer to an already complex picture of digital currencies’ future.
Source: Cointelegraph
