The Bank of Korea's cyber security response system and privacy protections for its digital currency system were a central focus at a parliamentary audit. Concerns included claims that hacking attempts against the central bank topped 3,000, along with a shortage of information security personnel and the risk of leakage of transaction information between banks. The possibility of additional policy rate hikes and the outlook for growth and inflation were also key topics for questions.

Questions continued at the National Assembly's comprehensive audit by the Finance and Economic Planning Committee on the morning of Oct. 23 over the Bank of Korea's financial system security management and the direction of monetary policy. Lawmakers checked the stability of the national payment and settlement network and the level of privacy protection for the digital currency, and called for monetary policy responses to stronger growth momentum.

Hacking attempts against BOK total about 3,070; information security staff put at 14

People Power Party lawmaker Kang Min-guk (강민국) 집중적으로 pointed to the Bank of Korea's cyber security response system and a shortage of information security personnel.

Data presented by Kang showed hacking attempts against the Bank of Korea since 2020 total about 3,070. The Gyeonggi IT Center also recorded 145 hacking attempts this year, the data showed.

Out of the Bank of Korea's total headcount of about 2,200, IT staff number 146, or about 6.6%. Of those, information security staff number 14, lawmakers said.

Kang also cited that information security staff account for about 9.6% of IT personnel across the financial sector, stressing the need to strengthen cyber security response capabilities across financial institutions.

The effectiveness of joint inspections by the Bank of Korea and the Financial Supervisory Service also became an issue. Kang said there had been 9 joint inspections over the past 7 years and asked whether checks in information security areas such as hacking had been sufficient.

Bank of Korea Governor Hyun Song Shin (신현송) explained that technical matters in the joint inspections are checked by supervisory bodies such as the Financial Supervisory Service. He also said he would verify security-related issues that were pointed out.

Kang said that if disruptions occur in the Han-eun Financial Network, the Bank of Korea's large-value payment system, settlement of funds between financial institutions could be delayed and liquidity problems could spread to other institutions.

Shin stressed that the Han-eun Financial Network is physically separated from the outside, making external access impossible. He said he would accept requests to submit materials on expanding information security personnel and budgets and on measures to improve joint inspections, and would check related matters.

Digital currency: concerns over interbank transaction information leakage and responsibility

Privacy protection issues in the distributed ledger-based digital currency system being pursued by the Bank of Korea were also discussed.

Reform Party lawmaker Lee Jun-seok (이준석) raised the possibility that other participating banks could access customer transaction information in a distributed ledger system where multiple financial institutions share transaction data.

He particularly pointed out that some transaction confidentiality protection functions reviewed by the Bank of Korea were not applied due to processing performance issues, stressing the need for technical improvements.

Lee argued that banning transaction data leaks through laws or internal regulations alone would make it difficult to sufficiently protect personal information. He suggested comparing technical safeguards being reviewed by overseas central banks, such as assigning a new address for each transaction.

Who would bear responsibility if a data leak occurs was also raised as an issue. If transaction data of a customer of Bank A is leaked at Bank B, another participating institution, responsibility could be unclear between the bank involved and the Bank of Korea, which operates the system.

Shin answered in the sense that the technical security level needs to be raised along with institutional safeguards.

Concerns were also raised about the schedule for phase 2 real transactions in the digital currency project. Lee said the timeline was tight, with an incident response manual set to be prepared by the third week of December ahead of real transactions scheduled for the end of December.

He also called for securing an independent body for security checks separate from private companies participating in system development.

Growth and inflation forecasts set to be revised up; focus on additional rate hikes

Questions also continued on the possibility of additional policy rate increases.

Democratic Party lawmaker Kim Nam-jun (김남준) asked about the terminal level of the rate hike cycle and the direction of monetary policy after the Bank of Korea's Monetary Policy Board held the policy rate at 3.00% per year the previous day.

Kim said the market is citing 3.50 to 3.75% per year as the terminal policy rate. He said stronger growth means the impact on prices, real estate prices and household debt needs to be considered comprehensively.

Shin said the central bank sees this year's and next year's economic growth rates as higher than its August forecast. He said next year's core inflation rate is also expected to slightly exceed the existing forecast of 2.5%. The Bank of Korea plans to release a revised economic outlook after its November Monetary Policy Board meeting.

Shin said, "We are looking at this year's and next year's growth rates, and next year's core inflation rate, as higher than existing forecasts," adding, "We will run monetary policy accordingly."