WEF raises concerns over quantum computing risks to CBDCs, cryptographic encryption

The World Economic Forum (WEF) has issued a stark warning about the vulnerabilities in central bank digital currencies (CBDCs), urging the implementation of quantum-resistant strategies to safeguard these digital currencies from emerging cybersecurity threats.

According to a recent WEF report developed with insights from Accenture experts, quantum computing poses significant risks to current encryption techniques.

The report highlighted that more than 98% of the world’s central banks are exploring CBDCs to improve cross-border payments and urged developing these systems with the risks of quantum computing in mind.

Quantum threats

Quantum computers, while revolutionary in solving complex problems, could potentially break the cryptographic mechanisms that protect financial data, making CBDC systems highly susceptible to cyberattacks. This is particularly concerning as CBDCs aim to improve cross-border payments and enhance financial inclusion.

Accenture’s experts emphasized the need for central banks to incorporate cryptographic agility into CBDC systems. Quantum cyberattacks could intercept networked communications, impersonate individuals, and steal financial assets, leading to severe economic impacts.

According to the report:

“Quantum computers have the potential to revolutionize data-intensive tasks across sectors. However, they also pose a unique cybersecurity threat as they could break current encryption schemes that protect critical financial data.”

A 2021 Hudson Institute study suggested that a quantum attack on the US real-time gross settlement system could significantly decrease GDP and trigger a recession.

Countermeasures

The WEF report recommends several strategies to mitigate these risks, including performing quantum security risk analyses, cataloging cryptographic mechanisms, and imposing strict cyber-resilience measures on entities with access to CBDC systems.

Implementing key encapsulation mechanisms and digital signature algorithms to secure communications and identities within these systems is also crucial. International efforts are underway to uncover approaches for safeguarding the next generation of national payment systems, including CBDCs.

The WEF has formed the Quantum Economy Network to develop guidance for the financial sector on informing global regulatory approaches. Additionally, the Bank for International Settlements (BIS) recently published the results of its Project Leap, which advances quantum-safe cryptography research for financial systems.

The report concludes that cryptographic agility must be at the core of any CBDC system to safeguard financial infrastructure from quantum cyber-attacks. Collaboration between the public and private sectors on instituting cyber-resilience will be key to successfully deterring the quantum threat.

As central banks pursue CBDCs, the emphasis on quantum-resistant strategies will be crucial in ensuring the security and stability of future financial systems, the report concluded.

The post WEF raises concerns over quantum computing risks to CBDCs, cryptographic encryption appeared first on CryptoSlate.