On the 7th of July, the Bank for International Settlements, BIS, a financial institution owned by constituent central banks, brought forth a framework for defending the CBDCs, or the central bank digital currencies against any and all cybersecurity threats. The Bank wrote that there were recent examples of hacks in smart contracts, which has definitely led to a loss of a significant amount of DeFi value- which could further serve as an example of the potential security risks that the CBDC systems could end up facing.
In the report, the bank also maintained that the security frameworks would definitely safeguard the confidentiality, availability, and integrity of the CBDC transactions. In its very design, the CBDCs should be able to dynamically scale in order to respond to a sudden surge in the volumes for its transactions, have no points of failure throughout, should be operational 24/7 without outages, and also function even if the underlying institution ends up experiencing some massive outages.
BIS Has Devised A Layout To Protect CBDCs
Together, the procedures involved by BIS also translate into 104 separate control objects, which include the 24/7 monitoring and alerting function, and doing due diligence on the security of the cryptographic keys, whilst using a DDoS protection service that would be able to alleviate the network traffic volume. In order to execute this particular framework, the bank also called for the creation of a central bank senior leadership and board, various information technology, security, and stakeholder teams, as well as a chief security officer.
While overtly cautious about defi, BIS has always remained pretty adamant about supporting the adoption of CBDCs. On the 20th of June, the financial organization went on to publish a unified-ledger proposal for tokenized, as well as cross-border asset transactions.