Hacking attacks present a bigger risk to the operation of UK banks than problems caused by the ongoing eurozone crisis, according to a senior Bank of England director.Hackers can melt down the banking system? Really? Instead of this?
Andrew Haldane, the BoE's director of financial stability, told parliament's Treasury Select Committee that representatives of Britain's top banks are telling him that cyber attacks have become their biggest threat over recent months.
And while the vast majority of readers may be left with the impression that JPMorgan's mindboggling $69.5 trillion in gross notional derivative exposure as of Q4 2012 may be the largest in the world, they would be surprised to learn that that is not the case. In fact, the bank with the single largest derivative exposure is not located in the US at all, but in the heart of Europe, and its name, as some may have guessed by now, is Deutsche Bank.Emphasis in the original. From where I sit, it looks like the financial risks of European insolvency are roughly a million times greater than the financial risks from hackers. And there's a simple solution to that - the financial sector could simply increase the amount that they spend on computer security by $1 B, and they would suddenly be much, much better funded than the Bad Guys. A Billion is a lot of money, but compared to 70 Trillion it's the change collected from under the cushions.
The amount in question? €55,605,039,000,000. Which, converted into USD at the current EURUSD exchange rate amounts to $72,842,601,090,000.... Or roughly $2 trillion more than JPMorgan's.
I wonder what color the sky is, over on Planet BoE.