Hackers Steal $31 Million at Russia's Central Bank (cnn.com)

The Bank of Russia has confirmed Friday that hackers have stolen 2 billion rubles ($31 million) from correspondent accounts at the Russian central bank. Central bank security executive Artiom Sychev said it could've been much worse as hackers tried to steal 5 billion rubles, but the central banking authority managed to stop them. CNNMoney reports: Hackers also targeted the private banks and stole cash from their clients, the central bank reported. The central bank did not say when the heist occurred or how hackers moved the funds. But so far, the attack bears some similarity to a recent string of heists that has targeted the worldwide financial system. Researchers at the cybersecurity firm Symantec have concluded that the global banking system has been under sustained attack from a sophisticated group -- dubbed "Lazarus" -- that has been linked to North Korea. But it's unclear who has attacked Russian banks this time around. Earlier Friday, the Russian government claimed it had foiled an attempt to erode public confidence in its financial system. Russian's top law enforcement agency, the FSB, said hackers were planning to use a collection of computer servers in the Netherlands to attack Russian banks. Typically, hackers use this kind of infrastructure to launch a "denial of service" attack, which disrupts websites and business operations by flooding a target with data. The FSB said hackers also planned to spread fake news about Russian banks, sending mass text messages and publishing stories on social media questioning their financial stability and licenses to operate.

Comments

CNN = Fake News.

[Anonymous Coward]

I don't trust anything from their site anymore. I'm going to see what RT has to say about this... Oh the irony!

can't convince me...

[Anonymous Coward]

That this wasn't done by Putin. Call it a conspiracy theory but the guy is dirtier than dirt.

And now he has a reason to invade the netherlands... or something suitably nasty.

Why can't they roll it back?

[drew_kime]

Serious question: In Debt of Honor there was a hack directed against the NYSE. They rolled back all transactions for the day. In a bank hack no one took physical cash. If they can show the transactions were fraudulent, why can't they just reverse it?

Re:Why can't they roll it back?

[Fire_Wraith]

Inflation is the short answer, yes. There's a bit more to it though.

The more detailed answer is that "money", whether it's physical bills/coins, bitcoins, or digits in an account on a computer, is just a proxy for real things - goods and services. Direct barter is pretty inefficient, in terms of time/effort/etc, so we abstract it with money. Now, while there's really no upper or lower bound on how much 'money' there is, there's a finite amount of physical goods and other productivity in the economy at a given time. Ideally, we'd have a perfect 1:1 ratio so that the amount of money flowing around matches the amount of physical goods/etc. In practice it's pretty difficult to actually do that to an exacting amount, so keeping it reasonably balanced is one of the primary responsibilities of a country's central bank, like the Fed.

The economy is generally growing, which means more goods and services, which means more money is needed to keep pace. Inflation isn't inherently bad, not in small amounts. It's only when inflation goes high that it gets bad. More importantly, negative inflation (deflation) is really really bad, because in that situation, the economy grinds to a halt because nobody wants to spend money (because it'll be worth more tomorrow), and we get into a nasty cycle that's hard to break out of - one that usually requires a lot of inflationary pressure to counteract, such as printing money or a central bank injecting more funds like the Fed did. Otherwise, if the government isn't willing to do enough, you wind up like Japan with your economy stuck in neutral for a decade or two.

So back to the question of reimbursement for bank theft losses - sure, you could probably absorb one or two of these without any real economic impact. The problem tends to come in the long run when you've established a policy of doing so, because it can quickly get out of control - try explaining why you'll reimburse Alice but not Bob for their losses.

For the Bank of Russia it's not even pocket change

[hey!]

It's just numbers on a spreadsheet. The Bank of Russia is Russia's central bank and there is literally no amount of money you can steal from a central bank that will harm it. That's because they're the people who issue the fiat in "fiat currency".

The harm is to the economy as a whole, in the form of inflation. In this case we're talking about the release of thirty one million spurious extra bucks into a two trillion dollar economy. Just a tiny bit of inflation, diluted to homeopathic concentrations and applied to everyone who uses rubles.

Of course the bank has to pursue this because it undermines confidence in the system, but this is as close to a victimless crime as any illegal way of obtaining thirty-one million dollars can be.