It found that the number of cyber attacks had tripled over the past decade with the financial services sector the most heavily targeted industry.
In a nightmare scenario for governments, businesses and people with money in a bank, the researchers found a successful attack could drag the entire economy to its knees.
“Given strong financial and technological inter-connections, a successful attack on a major financial institution, or on a core system or service used by many, could quickly spread through the entire financial system causing widespread disruption and loss of confidence,” it found.
“Transactions could fail as liquidity is trapped, household and companies could lose access to deposits and payments. Under extreme scenarios, investors and depositors may demand their funds or try to cancel their accounts or other services and products they regularly use.
“Cyber security has clearly become a threat to financial stability.”
The IMF urged businesses and governments to engage in “cyber hygiene”, saying that while many had in place preventative measures much more was needed.
The researchers found one of the reasons for the increase in cyber attacks was the falling cost of technology and the large increase in the use of mobile services by bank customers.
“Hacking tools are now cheaper, simpler and more powerful, allowing lower-skilled
hackers to do more damage at a fraction of the previous cost,” they found.
“The expansion of mobile-based services (the only technological platform available for many people), increases the opportunities for hackers. Attackers target large and small institutions, rich and poor countries, and operate without borders.”
The warning followed Reserve Bank governor Philip Lowe using an address to the Australian Payments Network to argue the rise of electronic wallets by major technology firms could harm financial competition.
He said digital wallets such as Apple Pay and Google Pay were being used more frequently by consumers who valued their ease-of-use and the way they could reduce fraud through the use of biometric authentication.
But Dr Lowe said there were competition issues with the development. Apple restricted access to the communication technology on its devices, which could restrict possible competition and increase costs, while Google collected information from customer transactions to provide marketing or company services to users.
He warned “big tech” also posed broader competition issues.
“Data analysis is part of their DNA and they have become increasingly effective at commercialising
the value of data they collect and analyse,” he said.
“Providing additional services, such as payments, also reduces the need for users to ‘leave’ the platform.”
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.