http://www.economist.com/news/business-and-finance/21694968-online-thieves-used-fake-emails-steal-money-101m-bank-heist-unseats
This article brings to light the ease at which people can electronically access and anonymously receive money. The Bangladesh Central bank asked the NY branch of the federal reserve to transfer $1 billion to private bank accounts in Sri Lanka and Philippines.
The criminals were able to get $101 million before authorities caught on. This has the potential to change people's faith in banks. If countries can lose their money through cyber crimes, than individuals also face a similar problem. This could cause consumers to save money as bills rather than in banks. It changes the trust people have in letting banks protect their money.
Relevant to our class this presents the literal example of a wave of fraud contributing to a rise in the demand for money which would cause a rise in inflation. Seeing that the criminals were stopped as their goal was 10% complete shows that the demand for real money balances will not increase certainly as much as it could have but as it was a significant figure of $101 million, it may have a substantial impact over time on the inflation rate. Yet to counter this theory, England last year had 1$billion siphoned online as the article points out though their inflation did not drastically spike
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ReplyDeleteI agree with Michael and would like to add that a wave of fraud like this would lead to increased interest rates, which would cause a decrease in investment. It is so confusing to me how someone would be willing to send this a massive amount like this without doing proper background research on the recipient of the money.
ReplyDeleteI agree with Michael and would like to add that a wave of fraud like this would lead to increased interest rates, which would cause a decrease in investment. It is so confusing to me how someone would be willing to send this a massive amount like this without doing proper background research on the recipient of the money.
ReplyDelete5) Mike brings a very valid point to the table! I also think this issue runs far deeper than just the banks though. There is a lot of cyber theft constantly happening in other industries besides banking. Furthermore, with how fast the stolen money generally changes hands it is nearly impossible to recover these large sums of money. Presenting an equally disheartening threat. And to think some people claim were heading towards a cashless society.
ReplyDeleteThis article is interesting and brings light to a rather serious issue. Cyber criminals are becoming smarter and more efficient in the ways they steal from users, and something has to be done to increase security online. I do agree with Charlie and find it rather odd that people were tricked into this so easily and it does raise some concern. We have to start finding better ways to stop cyber fraud and also find more efficient ways to track this money in the future in order to prevent more attacks.
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