Cybersecurity Risks and Central Banks’ Sentiment on Central Bank Digital Currency: Evidence from Global Cyberattacks

Abstract

This paper distinguishes two types of cybersecurity risks—emerging risks from the private sector and systematic risks to the financial system—and examines their impacts on central banks’ sentiment on CBDC in a context of global cyberattacks. We find that central banks’ sentiment toward CBDC shifted positively following increased losses from cyberattacks on crypto assets, which implies that central banks believe CBDC could be a public solution to protect consumers from risks arising from the private sector. However, their sentiment toward CBDC significantly declined following more active cyberwarfare attacks, which could pose systematic risks to the national financial system.

Keywords: cyberattacks, cybersecurity risks, central bank digital currency, crypto assets

JEL Classification: G15, G41, E58