- A cyberattack on the data or systems of any one of the five most active banks could spill over to others and affect more than a third of assets in the overall network, according to the New York Fed paper.
- Exact estimates of potential damage varied based on the timing and location of a US cyberattack, according to the paper.
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A sophisticated cyberattack on the US could ripple through major banks and severely disrupt the broader financial system, according to new research from the New York Federal Reserve.
A cyberattack on the data or systems of any one of the five most active banks could spill over to others and affect more than a third of assets in the overall network, analysts Thomas Eisenbach, Anna Kovner, and Michael Junho Lee said in the staff report this week.
"The reconciliation and recuperation process would be an unprecedented task," the paper said. "This could have severe implications on the stability of the broader financial system vis--vis spillovers to investors, creditors, and other financial market participants."
Exact estimates of potential damage varied based on the timing and location of a US cyberattack, according to the paper.
In one of the more severe scenarios, in which banks hoard liquidity in response to the attack, foregone payments could amount to up to 2.7 times US gross domestic product. Even a cyber attack on banks with less than $10 billion in assets would "impair a significant amount of the system."
The analysts used data from Fedwire Funds Service, the payment processing powerhouse at the center of the the US financial system.
"High-value payment and settlement systems may be a natural candidate for a malicious attacker intent on inflicting the largest possible damage to the financial system and the broader economy," the paper said.
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