Gold haters–think Paul Krugman–are fond of attacking gold and advocates of gold as money. They prefer digital monies that reside in computers. Nothing physical, such as coins that can jingle in your pockets, just a statement showing how many digital dollars you have “in the bank,” which is really not a bank but a computer.
However, digital money lovers were horribly embarrassed last week when hackers, from places unknown, tricked the New York Federal Reserve Bank into transferring $81 million dollars out of the Bangladesh central bank account into the Philippine casino system, which holds exemptions from many of the country’s money laundering requirements.
The hackers found flaws in SWIFT (Society for Worldwide Interbank Financial Telecommunications), which is used by some 11,000 banks and major corporations to transfer money around the world. And, faith in SWIFT was truly shaken. One analyst at a financial consulting firm said, “There are many banks out there right saying, ‘There but for the grace of God go us.’ ”
By all expert guesses so far, the money is gone–at least from Bangladesh’s banking system but is enriching someone, somewhere. It’s not clear yet as to whether the loss is that of the Fed or its counterpart in Bangladesh.
The Bangladesh central bank is being blamed for not employing better firewalls and for using $10 routers. Still, according to a SWIFT spokesman, even if the Bangladesh bank had employed the highest of security measures, the thieves displayed a level of skill, cunning and determination that may have been able to penetrate a far more secure system.
It is believed that the hackers spent months inside the Bangladesh central bank system to learn the credentials necessary to gain access to SWIFT.
According to the SWIFT spokesman, “If you have an attacker who really wants to get in and knows there is a big prize, keeping them out over the long term is really difficult.” Is there a bigger prize than the money lying in the world’s banks? Look for a sequel in the near future.