Federal Reserve To Use Internet For Money Transfer

An anonymous reader writes "According to the New York Post, the Federal Reserve (i.e. Alan Greenspan and Co.) is going to change the way that it transfers money between banks so that transfers now take place over the internet instead of via a private banking network. They aren't specifying the types of security measures that will be used (security through obscurity?) Am I the only one who thinks that this is a very bad idea? Might a DDOS attack on the Fed's computers bring down the entire banking system?" The banks have put some thought into security.

Comments

Re:VPN and PGP encrypt!

[paganizer]

Not as secure as what they have.
I worked on FRB hardware (back in 2001, so things might have changed a little). 486 CPU. 56k modem. essentially just a automated BBS style dial-in to the central systems, very cheap, uncomplicated, almost nothing that can screw up, and if it does, easy to fix; completely disconnected from local networks, info fed in by floppy (usually only a couple a day).
So of course I can understand why they want to modernize; the maintenance budget for the whole system on a yearly basis probably hits $5,000.

Cardboard boxes

[Dlugar]

Using encryption on the Internet is the equivalent of arranging an armored car to deliver credit-card information from someone living in a cardboard box to someone living on a park bench. (Gene Spafford)

The problem isn't the security of the data that's encrypted--the armored truck isn't going to have any problems--but what about the cardboard box?

Just as an example, the computer that the data is being sent to has to be connected to the Internet. How secure is this computer from attacks? If someone breaks into that computer, can they get to the unencrypted data?

Dlugar

Re:Possibly.

[vontrotsky]

I'm more worried about another slammer-type attack that floods the Internet.

While I think that is a completely valid and important concern, it overlooks something key. If terrorists/gangesters/whomever want to damage US financial systems, it's good thing that slammer type attacks are the first thing to come to mind. One of the things that made the WTC such an appealing target on 9/11 was that private corporate networks were dependant on services provide in the towers. The hijackers managed to take down the New York Stock echange for five (?) days, by damaging critical infrastructure. If putting the federal reserve system on the public internet, encourages DOS attacks and decreases the incentive to blow things up (including people), I'm all for it.

Jeff

Re:What is the Fed?

[johnnyb]

"This is the system that has evolved, it works better than the alternatives, and it isn't going to go away."

Actually, the founding fathers of the US thought that central banking was a bad idea, and Madison even said that central banking was more of a cause for the war than taxes.

Thomas Jefferson:

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs."

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."

James Madison:

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance."

Henry Ford:

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

Alan Greenspan:

"[The] abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holdings illegal, as was done in the case of gold.... The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.... [This] is the shabby secret of the welfare statist's tirades against gold. Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."