Digital Money: Operational Risks and the Threats to Operational Resilience
First published:
ISBN: 9781782724506
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Introduction: Money is information on the move
Introduction: Money is information on the move
Trends in digital money
How digital money creates new operational risks
Operational risk and cryptography
Operational risks of digital money
Commercial bank digital money
Private digital money, including cryptocurrencies
Public digital money, including CBDCs
Impact of digitisation on operational risk management
Impact of digitisation on operational risk organisations
Impact of digital money and operational resilience on ORM processes and people
Impact of digitisation on operational risk management in the future
Theory of money
Information theory
Classical cryptography
Modern cryptography
Conclusion
Acknowledgements
Appendix 1: Significant contributors to information theory and cryptography
Appendix 2: Timeline of significant contributions to information theory and cryptography
Appendix 3: Relevant information standards
Appendix 4: High-level risk registers
Bibliography
Everyone is familiar with money, whether they have it or not. Biblically, “love of money is the root of all evil”11 Bible, the King James Version – Timothy 6:10. and, as the US satirist Ambrose Bierce put it, money is a “blessing that is of no advantage to us excepting when we part with it”. In other words, money is pretty useless unless it is used. Money is a topic that divides people, and one where almost everyone has an opinion.
BUT WHAT EXACTLY IS MONEY?
The quote “Money is information on the move”, attributed to the ex-chairman of Citibank John Reed, would not jump immediately to mind for most people when describing money. Reed was one of the pioneers of automation in banking in the 1970s and, as argued in this book, his insight, although possibly obscure at first glance, is even more appropriate today.
When we buy something and hand over money to pay, what are we actually doing? We are giving a merchant some bits of coloured paper (banknotes) and/or cheap metal (coins)! On the face of it, that appears bizarre – paper for useful goods, really? (At this point, it becomes tedious to continue to use the terms notes and coins together, so we will concentrate on notes, and it can be
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