In this podcast, we take a look at a rarely discussed, structural vulnerability in advanced societies: the payments and settlements system. We first put this system in the historical context of economic warfare, then look at some potential forms of attacks, followed by a discussion with Michelle Couturier about possible local defensive measures.
The vulnerability of the advanced economies to economic warfare attacks is increasing as we use primarily fiat currencies, the largest part of which exist in digital formats only with little to no reserves. At the same time, we have allowed the functioning of our local, national and international economies to migrate over at a complex network of computer systems of dubious heritage and stability. The central nervous system of our economy is now the international payments and settlements which is jointly run by a series of Central Banks and Financial Institutes.
We focus the discussion on a simple proposition: what bankers are allowing to happen (consciously or not) at Central Banks and Financial Institutions (FIs) is far more fearsome than what terrorists have planned in the past. A failure of their jointly operated payments and settlements system would do more systemic damage to the advanced economies than any terrorist attack has done to date. This failure could result from an exterior attack by a state or group, an insider threat, or from technical failures in an overly complex system.
For the full show notes for this podcast, and accompanying papers, check out brokenmirrors.ca.
Photo Credit: Mike Gifford, Flickr.