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.
2.
3.
4.
5.

China - $3.2 Trillion

Japan - $1.1 Trillion
Russia - $516 Billion
Saudi Arabia - $484 Billion
Brazil - $352 Billion

There are also some non-governmental organizations with reserve currency

holdings:
1. European Economic Area - $1.4 Trillion
2. European Union - $1.36 Trillion
3. Eurozone - $840 Billion

Why do countries need to maintain vast amounts of the reserve

currency in their treasury and reserves?
The worlds 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 worlds reserve currency
The U.S. dollar is the worlds 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 institutionsdemocratic government,
public institutions, financial markets, and legal frameworkwhich, for all
their flaws, still set the standard for the world. For instance, despite the
Federal Reserves 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 countrys domestic
currency and the benefit of seigniorage revenuethe difference between the
purchasing power of money and the cost of producing itwhich 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. Chinas 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 economys 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 Communaut Financire 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
worlds 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 worlds reserve
currency. This currency could take the dollars 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
USDs prejudice in economic matters whilst also settling the debate centered
around which currency could/should replace the USD as the worlds reserve
currency.
Here are some factors backing the creation of a new universal currency to
solely serve as the worlds 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 worlds reserve currency?
Why?
3) What are the reasons behind opposition to USD as the worlds
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 worlds 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 worlds 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 worlds 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 worlds
reserve currency?
13)
What measures could be undertaken to increase the
efficiency of the USD as the worlds reserve currency?

Recommended reading for the

agenda
http://www.wealthdaily.com/articles/will-the-us-dollar-lose-itsreserve-status/4774
http://www.wsj.com/articles/SB1000142405274870331330457
6132170181013248
http://www.gfmag.com/magazine/december-2007/cover-storyuniversal-currency-could-hold-key-to-stability-and-growth
http://www.forbes.com/sites/bobmcteer/2013/09/05/reservecurrency-status-a-mixed-blessing/
https://www.jpmorgan.com/jpmpdf/1158630192140.pdf
http://mises.org/library/how-much-longer-will-dollar-bereserve-currency
http://www.businessweek.com/globalbiz/content/jan2010/gb201
00122_964613.htm
http://equitablegrowth.org/news/reserve-currency-privilegescosts/
http://www.voxeu.org/article/new-imf-reserve-currency
http://www.mckinsey.com/insights/economic_studies/an_exorbi
tant_privilege
http://www.wired.com/2011/12/st_essay_globalcurrency/
http://www.cer.org.uk/insights/euro-world%E2%80%99sreserve-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
worlds 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 countrys 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 persons 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 victims bank account information. If the victim releases
that information and the offender drains the victims bank
account, a financial fraud has been committed. The offender
may then also use the victims 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 Fraud
Internet auction fraud occurs in several ways, but the most
common is the failure to deliver the purchased item.
Counterfeit Payments Fraud
The latest scam to hit American consumers involves
counterfeit financial instruments.
Financial Fraud
Financial fraud is any non-violent offense that is committed
by or against an individual or corporation and which results
in a financial loss.
Identity Fraud
In 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 Fraud
The 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 Fraud
Online Pharmacy Fraud incorporates numerous crimes and
potentially dangerous health considerations.
Software Piracy
Software 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 Fraud
Thousands 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 banks problems.
The banks 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 Banks
Since 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
banks administrative computer. Programs installed by the
malware record keystrokes and take screen shots of the
banks 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-viamalware.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-mostcybercrime/
http://www.mcafee.com/in/resources/reports/rp-economicimpact-cybercrime2.pdf
http://www.acfcs.org/financial-crime-wave-wynn-resortsfaces-money-laundering-probe-graft-cripples-iraqi-militarybrazilian-cyber-thieves-run-training-schools-and-more/
http://www.whitehouse.gov/the-pressoffice/2015/01/13/securing-cyberspace-president-obamaannounces-new-cybersecurity-legislat
http://crr.bc.edu/wp-content/uploads/2012/03/ScamsRFTF.pdf
http://www.fbi.gov/scams-safety/fraud