Financial institutions' cybersecurity creates externalities that lead to market failure, prompting regulatory oversightExecutive summary: The article identifies a market failure in cybersecurity where financial institutions' digital resilience creates externalities that may lead to underinvestment and calls for qualitative supervision. It underscores the need for regulatory oversight to correct market inefficiencies and protect critical infrastructure. Financial institutions, regulators, private investors, and potential government supervisors. Regulators may strengthen supervisory frameworks and incentivize cybersecurity investment.The article explains that a financial institution's digital resilience generates positive externalities for competitors, meaning private incentives may underinvest in cybersecurity. It argues that qualitative supervision can fill the gap left by insufficient regulatory capital. The piece calls for policy attention to correct this market inefficiency.Connected developmentsSpaceX es la nueva Compañía de las Indias OrientalesA Zagreb, en Croatie, les premiers robots-taxis d’Europe tentent de s’insérer dans le traficOpen the full case file on Beyond →
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