In recent statements addressing contemporary cyber threats, including those pertaining to cryptocurrency cyber crime such as ransomware, the New Zealand Reserve Bank has rejected calls for enhanced and intrusive regulations.
Organisations Have to Be Swift Against Cyber Threats
The New Zealand Reserve Bank has rejected calls for enhanced regulations designed to target contemporary cyber threats, including ransomware and other challenges associated with virtual currencies.
In a speech which has been published on the New Zealand Reserve Bank’s website, Reserve Bank representative Toby Fiennes articulates the bank’s position on contemporary cyber threats. “The dynamic cyber environment means that organisations have to be nimble in their approach to cyber security – focused on outcomes, rather than prescriptive compliance exercises.”
The speech indicates recognition that the challenges posed by cryptocurrency will be dynamic, and that the threats posed by online crime cannot simply be regulated out of existence. “The nature and incidence of cyber risk is unique, meaning that typical approaches to risk management and disaster recovery planning may not be appropriate. While cyber vulnerabilities can be mitigated, the potential sources of cyber threats and the attack footprint are just too broad, so they can never be eliminated.”
Reserve Bank Recognizes the Disruptive Potential of Digital Currencies
Whilst recognizing the short term disruptive potential of contemporary fintech innovations like bitcoin, the New Zealand Reserve Bank also believes that these new technologies are likely to bring benefits to the financial system in the long term. The bank recommends against heavy-handed prescriptive regulations for cryptocurrency – suggesting that legal guidelines for virtual currencies should be flexible, adaptive, and not restrict innovation. “Looking forward, the Reserve Bank and other regulators will need to make sure the regulatory regime in New Zealand is adaptive should any new business models become systemic, while not unduly harming innovation.”
The central bank also revealed that it is working in partnership with other government agencies including the Ministry of Business, Innovation, and Employment, and the Financial Markets Authority to ensure that New Zealand cultivates a regulatory climate that will encourage financial innovation within the digital sphere.
Do you agree with the reserve bank of New Zealand’s opinion that regulations designed to protect against cyber crime could harm innovation in new financial industries? Share your thoughts in the comments section below!
Photo: Jack Atley/Bloomberg News