Dear Delegates,

We would like to extend our warm welcome to all of you. Let us start of by clearing a misconception about ECOFIN being a highly technical committee that involves knowledge of advanced economics. Contrary to popular belief, the ECOFIN is not technical, nor does it involve understanding of advanced economics. What reinstates this notion is the fact that Aman (vice chair) comes from an engineering background!

Most of the matters that the committee deliberates pertain to challenges in terms of money related matters that the world faces on an everyday basis. Once you understand the underlying problem that is brought forth by the agenda, understanding the economics that govern it becomes simple!

You are NOT required to know major economic theories or jargon; neither is there any extra points allocated for use of the same! All we expect from you is to be well researched and deal with the situation keeping basic economic and financial factors in mind.

Both Aman & myself share a common philosophy that restricts us from giving away too much in the study guides, as we believe it may limit/contain your dynamism. We have introduced the agenda and highlighted the main touch points. Painting the rest of the picture involves you using your powers of research and application.

We would urge to have a look at and focus at the “Questions a resolution must answer (QARMA)” before you start your preparation since it will provide you the required direction for your research as well as highlight essential topic areas for discussion. Both Aman & I are of the opinion the QARMA is the most important element of this study guide.

We look forward to having you as delegates and will ensure you take away a lot of learning as well as fun from this conference.

Regards,

Rahul Jawahrani (Chair) & Aman Johri (Vice Chair)

Agenda 1 – Setting up of an alternative universal reserve

currency

What is the meaning of 'Reserve Currency' and what is its purpose?

The reserve currency (USD) is a currency that is held by central banks and other major financial institutions as a means to pay off international debt obligations, or to influence their domestic exchange rate. A large percentage of commodities, such as gold and oil, are usually priced in the reserve currency, causing other countries to hold this currency to pay for these goods. The major reserve currency of the planet right now is the US Dollar, which composes upwards of 60% of all forex reserves

Here are the top five countries with the most foreign reserve currency:

1. China - $3.2 Trillion2. Japan - $1.1 Trillion3. Russia - $516 Billion4. Saudi Arabia - $484 Billion5. Brazil - $352 Billion

There are also some non-governmental organizations with reserve currency holdings:

1. European Economic Area - $1.4 Trillion2. European Union - $1.36 Trillion3. Eurozone - $840 Billion

Why do countries need to maintain vast amounts of the reserve currency in their treasury and reserves?

The world’s most essential commodities such as oil and gold are usually priced in the reserve currency hence governments need to have large pools of US Dollars in their foreign exchange reserves in order to engage in the buying and selling of these commodities. Countries maintain vast amounts of the USD to minimize exchange rate risk, as the purchasing nation will not

have to exchange their currency for the current reserve currency in order to make the purchase. Converting from one currency to another costs money, which is why many countries will simply stockpile reserve currencies such as the USD in order to avoid these costs. Countries also hold reserve currency for a number of different reasons - they are an important indicator of ability to repay foreign debt, to defend a national currency, and even to determine sovereign credit ratings.

Significance of the USD as the world’s reserve currency

The U.S. dollar is the world’s primary reserve currency; as a result, foreign nations closely monitored the monetary policy of the United States in order to ensure that the value of their reserves is not adversely affected by inflation. According to Robert Gilpin in Global Political Economy: Understanding the International Economic Order (2001): "Somewhere between 40 and 60 percent of international financial transactions are denominated in dollars. In 1996, the dollar accounted for approximately two-thirds of the world's foreign exchange reserves." Around $580 billion in U.S. bills were being used outside the country. In foreign exchange transactions, the dollar too is the most powerful currency. More than 85% of forex trading involves the U.S. dollar. Furthermore, 39% of the world's debt is issued in dollars. As a result, foreign banks require a lot of dollars to conduct business. For example, during the 2008 financial crisis, non-U.S. banks had $27 trillion in international liabilities denominated in foreign currencies. Of that, $18 trillion was in dollars.

Currently the U.S. Dollar is the only currency you can use to buy Crude Oil (this has changed slightly as Iran now takes other currencies). That means if you are another country you need to buy dollars to buy oil, even if it is only for a few nanoseconds. There is also a lot of liquidity with the USD. People know that there will always be someone willing to buy or sell dollars or accept payment in dollars.

For example:The Swiss Franc is considered to be very stable (more so than the USD), but there aren't a whole lot of them on the Currency Markets. That means if you wanted to buy something expensive and the transaction required Swiss

Francs it could take a while to get that many Francs or the exchange rate would skyrocket as you tried to buy up the required Francs with your own currency.

Reserve Currency – An historic overview

During the eighteenth and nineteenth centuries, the British pound reigned as the world's reserve currency but in the twentieth century, the U.S. dollar laid claim to this title. It has been the dominant currency since the end of World War II.

In the period following the Bretton Woods Conference of 1944, exchange rates around the world were pegged against the United States dollar, which could be exchanged for a fixed amount of gold. This reinforced the dominance of the US dollar as a global currency. A global currency is one that is accepted for all trade throughout the world. U.S. dollar is the most widely used. The relative strength of the U.S. economy means that its currency, the dollar, is the strongest world currency.

Since the collapse of the fixed exchange rate regime and the gold standard, most currencies around the world have no longer been pegged against the United States dollar. However, as the United States was and remains the world's preeminent economic superpower, most international transactions continued to be conducted with the United States dollar, and it has remained the de facto world currency.

Why is the U.S. dollar the current reserve currency of the world?

An evaluation of this question must begin with an understanding of why the U.S. dollar is so well regarded globally in the first place. There are four main reasons for this. One, it has, at least until now, been a reliable store of value. Two, it is the most widely accepted means of international payment for goods and services. Third, large, deep, and liquid dollar financial markets exist for savers to invest their money in. And finally, a long period of dominance has allowed the currency to become a part of the international financial trading infrastructure.

The U.S. dollar is the most frequently used currency in international trade today. The fact that the U.S. is the world's largest trading nation is only part of the reason. The value of international trade that is invoiced in dollars is much larger than the total trade conducted by the U.S. and countries with currencies linked to the greenback. This is particularly true in Asia, where many countries bill more than 80% of their exports in dollars. Large international savers such as the Persian Gulf states and East Asian exporters also find U.S. financial markets most attractive. Partly, this is because Gulf oil exports are paid for in dollars and because it is the most convenient currency with which to intervene in foreign exchange markets for Asian central banks. But more importantly, the U.S. financial markets remain the most efficient place to intermediate global funds. In these markets, particularly the U.S. Treasury market, large amounts of financial assets can be bought and sold without causing large movements in market price. Moreover, due to the narrow differences between buying and selling prices, the costs of transacting in these assets are lower than in any other market. Investing in U.S. financial markets, and also through the dollar in other financial markets, therefore, lowers costs and increases the flexibility of portfolio decisions.

The previous two reasons also give rise to a third factor that keeps the U.S. dollar as the world's currency. The dollar has become an integral part of international financial and commodity markets because it is so frequently used in international trade and investment. In quoting exchange rates, the value of a currency is most commonly stated in terms of the U.S. dollar.

Even in actual exchange, the dollar's role is important. A company wishing to exchange Thai baht for New Zealand dollars typically buys U.S. dollars first, before converting them into New Zealand dollars. As a result, the U.S. dollar is involved in one leg in close to 90% of all foreign exchange transactions, compared with less than 40% for the euro and 16% for the Japanese yen.

Stability is another factor that explains why a number of countries have adopted the U.S. dollar as official currency. The U.S. dollar has never been devalued, and its notes have never been invalidated. For countries all too familiar with bank failures, devaluation and inflation, the stability of the U.S. dollar brings with it a certain amount of peace of mind. Business is easier to conduct when a stable currency is used. The reason the United States appears so special in global finance is not just because of the size of its economy, but also because of its institutions—democratic government, public institutions, financial markets, and legal framework—which, for all their flaws, still set the standard for the world. For instance, despite the Federal Reserve’s aggressive and protracted use of unconventional monetary policies, investors worldwide still seem to trust that the Fed will not allow inflation to get out of hand and diminish the value of the dollar.

Some of the world's currencies are still pegged against the dollar. Some countries, such as Ecuador, El Salvador, and Panama, have gone even further and eliminated their own currency in favor of the United States dollar. This is known as dollarization.

Dollarization is a generic term that can fall into three categories:

1. Official Dollarization: The dollar is the only legal tender; there is no local currency. Examples of this can be seen in Panama, El Salvador and Ecuador. For example, since independence in 1903, Panama has only used the U.S. dollar. Surprisingly, the U.S. government does not have to provide approval for another country to use its currency as legal tender.

2. Semi-Dollarization: A country will use both its own currency and the U.S. dollar interchangeably as legal tender. Lebanon and Cambodia are good examples of this.

3. Unofficial Dollarization: For many countries in the developing world, the dollar will be widely used and accepted in private transactions, but it is not classified as legal tender by the country's government.

Opposition to USD as the reserve currency

There are tangible and intangible benefits to a country whose currency serves as a reserve currency. In addition to the prestige conferred by this status, it also means access to cheap financing in the country’s domestic currency and the benefit of seigniorage revenue—the difference between the purchasing power of money and the cost of producing it—which can be extracted from both domestic and foreign holders of the currency. Because of the benefits that have accrued to the dollar from its reserve currency status, there should, in principle, be new competitors seeking a share of those benefits.

One putative competitor to the dollar, which has been the subject of considerable attention, is the Chinese renminbi. China’s economy is the second biggest in the world and is on track to become the largest over the next decade. The Chinese government is taking many steps to promote the use of the renminbi in international financial and trade transactions. These steps are fast gaining traction given the economy’s sheer size and prowess in international trade. As restrictions on cross-border capital mobility are removed and the currency becomes freely convertible, the renminbi will also become a viable reserve currency.

The other likely candidates for an alternative international currency are the euro and Japanese yen. In recent years, however, the growth in the use of the euro has slowed significantly. In terms of use in international trade and international debt issuance, the share of the euro has stabilized. The euro has increasingly competed with the United States dollar in international finance. The Euro has grown in prominence over the past decade as a reserve currency, and now makes up nearly 30% of all forex reserves through the world. 

Prior to the crisis, in March 2009, China and Russia suggested the world adopt a new global reserve currency. The goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies." In other words, China is concerned the trillions it holds in dollars will be worth less if dollar inflation sets in.

This could happen as a result of increased U.S. deficit spending and printing of U.S. Treasuries to support U.S. debt. Hence, China called for the IMF to develop a currency to replace the dollar as the reserve currency. According to economist Michael Hudson, China has said, "we don't want to make any more foreign exchange reserve of any paper currency, because all the paper currencies are government debt currencies." China, Russia, India, Turkey, Brazil, Venezuela and oil-producing countries have recently sided with the notion.

A report released by the United Nations Conference on Trade and Development in 2010, called for abandoning the U.S. dollar as the single major reserve currency. The report states that the new reserve system should not be based on a single currency or even multiple national currencies but instead permit the emission of international liquidity to create a more stable global financial system. Countries such as Russia and the People's Republic of China, central banks, and economic analysts and groups, such as the Gulf Cooperation Council, have expressed a desire to see an independent new currency replace the dollar as the reserve currency. On 10 July 2009, Russian Prime Minister (then President) Medvedev proposed a new 'world currency' at the G8 meeting in London as an alternative reserve currency to replace the dollar.

Revisiting the debate of creating a universal currency

The concept of a single worldwide currency has been suggested since the 16th century, and came close to being instituted after World War II - yet the idea remains little more than that.

Proponents argue that a universal currency would mean an end to currency crises like Zimbabwe's. A single currency wouldn't be subject to exchange rate fluctuations because there would be no competing currencies to exchange against. In other words, a universal currency would lose its value as a commodity bought and sold on open markets and would have value only for its worth in buying other commodities. To put it plainly, money would become just money. Its purchasing power would be the result of the adjustment of interest rates and other monetary policy tools in response to inflation or deflation.

Who would be responsible for adjusting those interest rates, though?One of the chief fears among opponents of a universal currency is the creation of a central body formed to oversee the monetary policy for a single world currency.

These reasons and others continue to prevent the adoption of a universal currency. Perhaps closer on the horizon is the integration of separate currencies within regions into unified currencies. This has already occurred in some areas. The most famous example is the euro. As of 2013, 17 countries in Europe use the euro instead of their local currencies. Some the benefits touted include stimulation in trade activities and a reduction in transaction costs and fluctuation risks as member countries no longer need to exchange currencies when doing business with each other. Tourists also don't have to switch currencies when they travel either. At the same time, there are significant disadvantages. For instance, a debt-laden country is no longer able to devalue its own currency to make its goods more attractive to buyers from other countries. The financial troubles of countries like Greece and Spain in the 2010s have been exacerbated, some experts say, by the fact that they use the euro

The euro is not the only example of a shared currency. Eight West African nations share a common currency, the West African CFA franc (CFA stands for Communauté Financière d'Afrique or African Financial Community), which was introduced in 1945. A further six Central African countries use the Central African CFA franc in recent times.

Creation of a new universal currency, which ONLY serves the purpose of functioning as the world’s reserve

currency

The notion of creation of an official universal currency to replace all the existing currencies in the world might seem very debatable and far-fetched. It would involve many legislative and economic hurdles that could not possibly be won. It would also lead to the cessation of the trillion-dollar forex industry.

However, many economists argue that another universal currency should be created all together with the sole purpose of serving as the world’s reserve currency. This currency could take the dollar’s place in international settlements, be independent of the economic scenario in the United States whilst not leading to the cessation of the trillion-dollar forex industry. This could also solve international economic and political conflicts regarding the USD’s prejudice in economic matters whilst also settling the debate centered around which currency could/should replace the USD as the world’s reserve currency.

Here are some factors backing the creation of a new universal currency to solely serve as the world’s reserve currency.

An End to Transaction Costs

Everyday, roughly 1.4 trillion dollars are traded via the foreign exchange market. Buried within every transaction are fees and costs that amount to roughly .33% of the total amount exchanged. Although seemingly an insignificant number, when considering the vast volume traded in the foreign exchange markets it amounts to approximately 1 trillion dollars a year! The creation of a single currency would virtually eliminate all of these costs and allow a free flow of money. The money saved from the elimination of transaction costs could be put into positive global needs, such as feeding the hungry or funding research to cure diseases.

Troubled Currencies

With the rapid evolution of the global marketplace over the last several decades and the immense need for international trade, nations must not only be confident in the strength of their own currency, but also in the strength of their trading partners’ currencies. Economists speculate that a currency crisis in one nation has the potential to spread fear amongst its trading partners, which could eventually lead to a currency epidemic. The recent and disastrous currency crises in Thailand, Mexico, Argentina and Russia have proven this to be true. The introduction of a universal currency would eliminate the possibility of such a potentially catastrophic situation.

Countries in Debt

In the modern global market, it is very common for one country to borrow funds from another nation. As a result of the volatility in exchange rates, many creditor nations are concerned with the possibility of depreciation in the value of their loans due to a currency devaluation or crisis. For example, the United States and Japan have the highest national debts in the world and if their currencies were to depreciate in value then their debt would be worth less. While this would be beneficial to debtor nations, their creditors would essentially be losing money. A universal currency system without exchange rate volatility would ease the fears of creditor nations and might even encourage more lending between nations.

Questions a Resolution Must Answer

1) Is there actually a need for a reserve currency?2) Should the US Dollar continue as the world’s reserve currency?

Why?3) What are the reasons behind opposition to USD as the world’s

reserve currency?4) Does the USD have an unjust advantage over others in the

world market due to its status as the reserve currency?5) Is there a need to replace the world’s reserve currency?6) Should there be one more alternative reserve currency along

with the USD? Why? 7) Which currency could serve/be added as the alternative reserve

currency?8) If the USD was to be abolished as the world’s reserve currency,

which other currency should take its place? Why?9) How feasible is the prospect of the creation of a new universal

currency and using the same as the world’s reserve currency?10) What would be the benefits of the scenario stated in the

question above?11) What would be the time period involved in initiating such

a change?12) Who would be the biggest winners and losers from the

prospect of a new universal currency serving as the world’s reserve currency?

13) What measures could be undertaken to increase the efficiency of the USD as the world’s reserve currency?

Recommended reading for the agenda

http://www.wealthdaily.com/articles/will-the-us-dollar-lose-its-reserve-status/4774

http://www.wsj.com/articles/SB10001424052748703313304576132170181013248

http://www.gfmag.com/magazine/december-2007/cover-story-universal-currency-could-hold-key-to-stability-and-growth

http://www.forbes.com/sites/bobmcteer/2013/09/05/reserve-currency-status-a-mixed-blessing/

https://www.jpmorgan.com/jpmpdf/1158630192140.pdf

http://mises.org/library/how-much-longer-will-dollar-be-reserve-currency

http://www.businessweek.com/globalbiz/content/jan2010/gb20100122_964613.htm

http://equitablegrowth.org/news/reserve-currency-privileges-costs/ http://www.voxeu.org/article/new-imf-reserve-currency

http://www.mckinsey.com/insights/economic_studies/an_exorbitant_privilege

http://www.wired.com/2011/12/st_essay_globalcurrency/

http://www.cer.org.uk/insights/euro-world%E2%80%99s-reserve-currency

Agenda 2 – Financial Security in Cyber Space

Introduction to Cyberspace

The Internet is revolutionizing our society by driving economic growth and giving people new ways to connect and co-operate with one another. Falling costs mean accessing the internet will become cheaper and easier, allowing more People around the world to use it, ‘democratizing’ the use of technology and feeding the flow of innovation and productivity. This will drive the expansion of cyberspace further and as it grows, so will the value of using it and the background to the growth of the networked world and the immense social and economic benefits it is unlocking. As with most change, increasing our reliance on cyberspace brings new opportunities but also new threats.

While cyberspace fosters open markets and open societies, this very openness can also make us more vulnerable to those – criminals, hackers, foreign intelligence services – who want to harm us by compromising or damaging our critical data and systems. The networks on which we now rely for our daily lives transcend organizational and national boundaries. Events in cyberspace can happen at immense speed, outstripping traditional responses (for example, the exploitation of cyberspace can mean crimes such as fraud can be committed remotely, and on an industrial scale). Although we have ways of managing risks in cyberspace, they do not match this complex and dynamic environment. So there is a need for a new and transformative program to improve cyber security domestically, as well as continuing to work with other countries on an international response.

The Internet and digital technologies are transforming our society by driving economic growth, connecting people and providing new ways to communicate and co-operate with one another. The World Wide Web only began in 1991, but today 2 billion people are online– almost a third of the world’s population. Billions more are set to join them over the next decade. There are over 5 billion internet-connected devices. $8 trillion changed hands last year in online commerce. The Internet is already having a profound impact on the way we live our lives. This social change will only grow and gather pace as the number of users increases. Already it looks like it will be on the scale of the very biggest

shifts in human history, such as the coming of the railways, or even learning to smelt metals. It is easy to see why the growth of the Internet has been so dramatic. Cyberspace is transforming business, making it more efficient and effective. It is opening up markets, allowing commerce to take place at lower cost and enabling people to do business on the move. It has promoted fresh thinking, innovative business models and new sources of growth. It enables companies to provide better, cheaper and more convenient service to customers. And it helps individuals to shop around, compare prices and find what they want. Developing countries in particular stand to benefit as increasing interconnectivity makes commerce easier and allows access to information, knowledge and education, enabling people to innovate, collaborate and compete in global marketplaces.

Nature of crime in cyberspace

The digital architecture on which we now rely was built to be efficient and interoperable. When the Internet first started to grow, security was less of a consideration. However, as we put more of our lives online, this matters more and more. People want to be confident that the networks that support our national security, our economic prosperity, and our own private lives as individuals are safe and resilient. Unfortunately a growing number of adversaries are looking to use cyberspace to steal, compromise or destroy critical data. The scale of our dependence means that our prosperity, our key infrastructure, our places of work and our homes can all be affected.

Some of the most sophisticated threats to countries in cyberspace come from other states which seek to conduct espionage with the aim of spying on or compromising our government, military, industrial and economic assets, as well as monitoring opponents of their own regimes.‘Patriotic’ hackers can act upon states’ behalf, to spread disinformation, disrupt critical services or seek advantage during times of increased tension. In times of conflict, an enemy can use cyberspace to attack a country’s critical infrastructure, spread propaganda, radicalize potential supporters, raise funds, communicate and plan also use cyberspace.

Organizations are not always aware of the new vulnerabilities that dependence on cyberspace can bring. Intellectual property and other commercially sensitive information (for example, business strategies) can be attractive targets. In the spring of 2011, Sony announced that criminals had successfully targeted the PlayStation network, compromising the personal details of up to 100 million customers and resulting in the network shutting down for several weeks. The costs to Sony are expected to total $171 million. Recent research suggests that the costs to the UK of cyber crime could be in the order of £27 billion per year

When it comes to preventing online financial fraud or detecting it in real-time, many organizations confess that they need to do a better job, according to a new global survey by Kaspersky Lab. Nearly half of the

respondents (45 percent), for instance, admit their online defenses are inadequate and that they need to "take improved measures to protect financial transactions." The survey also found that many businesses say data protection is highly important to them, but one in four businesses "is willing to suffer losses incurred by cybercrime because they believe the cost of protection will outweigh the cost of dealing with the losses."

Online fraud comes in many forms.  It ranges from viruses that attack computers with the goal of retrieving personal information, to email schemes that lure victims into wiring money to fraudulent sources, to “phishing” emails that purport to be from official entities (such as banks or the Internal Revenue Service) that solicit personal information from victims to be used to commit identity theft, to fraud on online auction sites where perpetrators sell fictional goods. 

“Online Fraud” is used as an umbrella term to encompass both financial fraud and identity theft.  Financial fraud and identity theft can be separate or related crimes.  Identity theft happens when a person’s identity is used to commit, aid, or abet any unlawful activity.  Often financial fraud can lead to identity theft.  For example, an offender may send an email to a victim, pretending to be from a bank and ask for the victim’s bank account information.  If the victim releases that information and the offender drains the victim’s bank account, a financial fraud has been committed.  The offender may then also use the victim’s personal information to create additional bank accounts through which money is laundered, or to open additional credit cards.  This second piece is identity theft.  It is important to recognize that the crimes of financial fraud and identity theft are distinct crimes, but that at times they may be interrelated. Some common types of online are -

Auction FraudInternet auction fraud occurs in several ways, but the most common is the failure to deliver the purchased item.

Counterfeit Payments FraudThe latest scam to hit American consumers involves counterfeit financial instruments.

Financial FraudFinancial fraud is any non-violent offense that is committed by or against an individual or corporation and which results in a financial loss.

Identity FraudIn what many are calling America's fastest growing type of robbery, crooks use your name, social security number or that blank, pre-approved credit application you tossed out.

Online Advertising FraudThe growth of the online advertising industry has attracted the attention of cyber criminals who seek to defraud advertisers by infecting unsuspecting consumers' computers and using them to generate fake ad clicks. Beware of the following ways in which you, or your computer, may be victimized and used as a pawn in these fraud schemes. Pharmacy FraudOnline Pharmacy Fraud incorporates numerous crimes and potentially dangerous health considerations.

Software PiracySoftware piracy is the unauthorized copying or distribution of copyrighted software. This can be done by copying, downloading, sharing, selling or installing multiple copies onto personal or work computers.

Sweepstakes/Lottery FraudThousands of American consumers receive sweepstakes promotions but if you have to pay to play or pay to receive your "winnings" the promotion is a scam.

Case Study 1

PALO ALTO, Calif. — In late 2013, an A.T.M. in Kiev started dispensing cash at seemingly random times of day. No one had put in a card or touched a button. Cameras showed that customers who appeared lucky to be there at the right moment had swept up the piles of money.But when a Russian cyber security firm, Kaspersky Lab, was called to Ukraine to investigate, it discovered that the errant machine was the least of the bank’s problems.

The bank’s internal computers, used by employees who process daily transfers and conduct bookkeeping, had been penetrated by malware that allowed cybercriminals to record their every move. The malicious software lurked for months, sending back video feeds and images that told a criminal group — including Russians, Chinese and Europeans — how the bank conducted its daily routines, according to the investigators.Then the group impersonated bank officers, not only turning on various cash machines, but also transferring millions of dollars from banks in Russia, Japan, Switzerland, the United States and the Netherlands into dummy accounts set up in other countries.

How Hackers Infiltrated BanksSince late 2013, an unknown group of hackers has reportedly stolen $300 million — possibly as much as triple that amount — from banks across the world, with the majority of the victims in Russia. The attacks continue, all using roughly the same modus operandi:

Hackers send email containing a malware program called Carbanak to hundreds of bank employees, hoping to infect a bank’s administrative computer. Programs installed by the malware record keystrokes and take screen shots of the bank’s computers, so that hackers can learn bank procedures. They also enable hackers to control the banks’ computers remotely. By mimicking the bank procedures they have learned, hackers direct the banks’ computers to steal money in a variety of ways:

Transferring money into hackers’ fraudulent bank accounts, using e-payment systems to send money to fraudulent accounts overseas and directing A.T.M.s to dispense money at set times and locations

In a report to be published on Monday, and provided in advance to The New York Times, Kaspersky Lab says that the scope of this attack on more than 100 banks and other financial institutions in 30 nations could make it one of the largest bank thefts ever — and one conducted without the usual signs of robbery. The Moscow-based firm says that because of nondisclosure agreements with the banks that were hit, it cannot name them. Officials at the White House and the F.B.I. have been briefed on the findings, but say that it will take time to confirm them and assess the losses.

Kaspersky Lab says it has seen evidence of $300 million in theft through clients, and believes the total could be triple that. But that projection is impossible to verify because the thefts were limited to $10 million a transaction, though some banks were hit several times. In many cases the hauls were more modest, presumably to avoid setting off alarms.The majority of the targets were in Russia, but many were in Japan, the United States and Europe.

Read the entire article here - http://www.nytimes.com/2015/02/15/world/bank-

hackers-steal-millions-via-malware.html?_r=0

Case Study 2

Questions a resolution must answer

Which countries have high cyberspace crime rates?

What is the impact of said crime in monetary terms?

How much of the above stated monetary impact was due to inadequate financial security in cyberspace?

What are the commonly used methods to execute these crimes?

Is there a connection between financial frauds in the cyber space and terrorism?

Why are the current mechanisms of financial security on cyber space failing?

What role can the private sector play in enforcing greater financial security in cyber space?

What measures can be taken by government authorities to improve financial security in cyberspace?

Discuss the role of ethical hacking to foster financial security in cyber space?

How has the emergence of M-commerce & increasing mobile-based applications on Internet enable devices (tablet & smartphones) accelerated the threat to financial security in cyberspace?

What can currently be done to mitigate existing threats to financial security in cyber space?

Resources for further reading

http://www.enigmasoftware.com/top-20-countries-the-most-cybercrime/

http://www.mcafee.com/in/resources/reports/rp-economic-impact-cybercrime2.pdf

http://www.acfcs.org/financial-crime-wave-wynn-resorts-faces-money-laundering-probe-graft-cripples-iraqi-military-brazilian-cyber-thieves-run-training-schools-and-more/

http://www.whitehouse.gov/the-press-office/2015/01/13/securing-cyberspace-president-obama-announces-new-cybersecurity-legislat

http://crr.bc.edu/wp-content/uploads/2012/03/Scams-RFTF.pdf

http://www.fbi.gov/scams-safety/fraud