Cyberattack Contagion in the Financial System Analysis

This technical report analyzes the growing threat of cyberattacks to the global financial system, particularly focusing on the U.S. financial sector. It outlines two adverse scenarios involving cyberattacks: one involving a deposit run triggered by attacks on small and medium-sized financial institutions, and another that paralyzes the retail payments system. The report utilizes the Moody’s Analytics Global Macroeconomic Model to trace the economic consequences of these attacks. It discusses the vulnerabilities exposed by recent breaches and highlights the increasing severity of cyber threats. The analysis emphasizes the potential for cascading losses within the financial system, despite ongoing investments in cybersecurity. The report also details the methodology used to assess the economic impacts of the scenarios, including shocks to bank lending standards and consumer confidence. Overall, the document presents a comprehensive examination of the implications of cyber threats on financial stability.