US Federal Reserve Bank summoned research shows catastrophic effect of quantum attack on ecosystem

US Federal Reserve Bank summoned research shows the catastrophic effects of #quantum #computing-enabled #attacks on the US #financial #ecosystem. How long will the #Australian government wait to recognise the #risk?

Exciting and unsettling developments in quantum computing necessitate a wake-up call to the potential threats this technology can pose to the financial ecosystem. A recent study in association with the US Federal Reserve Bank by the Quantum Alliance Initiative throws light on this imminent danger and suggests a way forward.

The study focused on simulating consequences in case of a quantum-enabled attack on one of the most high-impact elements, the Fedwire Fund Service, in which the Fed provides real-time-gross settlement (RTGS) for interbank payments. The findings were stark - a quantum-enabled attack could create havoc far greater than any conventional cyber hack, essentially because of its undetectability. An attack like this could persist, unnoticed, for days or even weeks.

The potential financial impact of such an attack is profound. If a quantum attack targeted one of the five largest US financial institutions' access to the Fedwire Funds Service payment system, a cascading financial failure could cost the US economy anywhere from $2 to $3.3 trillion in indirect impacts alone.

Critics argue that the quantum computing technology capable of such devastation is at least a decade away. However, this complacency is not without its risks. Progress in algorithmic development, particularly in those that reframe factorisation as an optimisation challenge, has shown significant breakthroughs. This suggests that the timeline for a practical quantum threat may be considerably shorter than we initially anticipated.

Critics wave these estimates away by insisting that QCs capable of this kind of threat are at least a decade away. The problem is that getting quantum-secure, including analysing which data and networks need protection most and which legacy cybersecurity systems need not only patched but completely replaced, can take almost as long.

To secure the financial system, the authors propose a four-step program:

1. Adopt NIST Post-Quantum Cryptography (PQC)

2. Call a Quantum Security Summit involving the largest banks

3. Set a deadline for Federal Reserve banks to become quantum-secure

4. Establish a Quantum Security Taskforce

The Australian government might well consider these steps too. Black swan events, those infrequent occurrences with high impact, pose a fundamental challenge in policy-making. Even though these events are rare, their economic implications are typically so vast and far-reaching that they significantly affect societies.

Research: https://www.hudson.org/technology/prosperity-risk-quantum-computer-threat-us-financial-system