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41. Exposing the Financial Footprints of North Korea’s Hackers

Author:
Jason Bartlett
Publication Date:
11-2020
Content Type:
Special Report
Institution:
Center for a New American Security (CNAS)
Abstract:
North Korea conducts intricate and sweeping cyberattacks against the United States and its allies to acquire funds to support its illicit nuclear proliferation efforts. Unlike more economically advanced nuclear states possessing domestic research, development, and deployment capacities to establish weapon of mass destruction (WMD) programs, the Democratic People’s Republic of Korea (DPRK) must seek financial resources, assistance, and institutional knowledge, at least initially, from overseas. It has developed its cyber capabilities in order to circumvent financial sanctions and global safeguards, conducting elaborate online bank heists and hacking attacks; stealing funds through fraudulent bank transfers, Society for Worldwide Interbank Financial Telecommunications (SWIFT) transactions, and ATM cash-outs; launching ransomware attacks demanding payment in cryptocurrency; and hacking cryptocurrency exchanges. The scale and sophistication of these innovative sanctions evasion tactics create a challenge that calls for stronger measures to confront them. In addition to providing policy recommendations for U.S. leadership and financial institutions, this report will outline the ways North Korea supports, expands, and utilizes cyber operations to acquire funds for its nuclear weapons program.
Topic:
Science and Technology, Cybersecurity, and Finance
Political Geography:
Asia, North Korea, North America, and United States of America

42. How the Classical Gold Standard Can Inform Monetary Policy

Author:
James A. Dorn
Publication Date:
10-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
atching the frenzy surrounding Judy Shelton’s confirmation hearing before the Senate Banking Committee on February 13, one is led to believe that the gold standard is a “nutty” idea, for which no serious economist or monetary policymaker could possibly have a kind word (see U.S. Senate 2020). This article critiques that wholesale refutation of the gold standard. In recent years (as well as in the past), both serious economists and reputable monetary policymakers have recognized the benefits of a gold standard in reducing regime uncertainty and promoting monetary and social order. Whatever one may think of President Trump’s recent Fed picks, the gold standard itself deserves more respect than it’s been getting.
Topic:
Monetary Policy, Federal Reserve, Finance, and Gold Standard
Political Geography:
Global Focus and United States of America

43. Financial Transactions Taxes: Inaccessible and Expensive

Author:
Diego Zuluaga
Publication Date:
10-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Financial transactions taxes (FTTs) have become increasingly popular since the 2008 financial crisis. During the 2020 Democratic presidential primary race, FTTs featured prominently on the platforms of both moderate Michael Bloomberg and socialist Bernie Sanders. The likely nominee, Joe Biden, has also expressed support for an FTT, albeit without offering any details in his election platform.
Topic:
Financial Crisis, Finance, Domestic Politics, Tax Systems, and Transactions
Political Geography:
North America and United States of America

44. Perspectives on Balance Sheet and Credit Policies: A Tribute to Marvin Goodfriend

Author:
Esther L. George
Publication Date:
10-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Iappreciate this opportunity to pay tribute to Marvin Goodfriend and his many contributions to the theory and practice of monetary policy. At the Kansas City Fed, we knew Marvin as a scholar and a good Federal Reserve colleague. Marvin also was a participant in a number of our Jackson Hole Economic Symposiums. As a Research Officer at the Richmond Fed, he attended the first symposium that we held in Jackson Hole, Wyoming, in 1982, where his work on “Discount Window Borrowing, Monetary Control, and the Post‐​October 6, 1979 Federal Reserve Operating Procedure” was widely cited.1 Thirty‐​four years later in 2016, as a professor at Carnegie Mellon, he presented a paper making the case for deeply negative interest rates as a policy tool that could breach the zero lower bound on nominal rates. He argued that “the zero interest bound encumbrance on monetary policy should be removed so that movements in the intertemporal terms of trade can be reflected fully in interest rate policy to sustain price stability and full employment with a minimum of inefficient and costly alternative policies” (Goodfriend 2016; 128; emphasis added).
Topic:
Monetary Policy, Finance, Interest Rates, and Credit
Political Geography:
Global Focus and United States of America

45. Dealing with China: Lessons Learned from Three Case Studies

Author:
Christopher W. Bishop
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Canadian Global Affairs Institute (CGAI)
Abstract:
The idea for this paper began after several conversations with Canadian friends and colleagues about the cases of Michael Kovrig and Michael Spavor. On December 10, 2018, Chinese officials detained the two Canadian citizens for “endangering state security”, 10 days after Canadian authorities arrested Meng Wanzhou, Huawei’s chief financial officer, on an extradition warrant from the United States, where she was wanted for bank fraud. Despite Chinese statements denying any connection between the two Michaels and Meng, some Canadians have argued the only way to gain their release is for Canada to release Meng – a classic “prisoner exchange”. Others, however, have argued just as forcefully that trading Meng for the two Canadians would only give legitimacy to China’s “hostage diplomacy”. One friend asked me if China had ever done anything like this before. How had those cases been resolved, and what would China do this time? Those were good questions. As a U.S. Foreign Service officer who has spent much of my career working on China – including at the U.S. embassy in Beijing from 2015-2018, where I analyzed the Communist Party leadership and China’s state security apparatus – I had some insight into Chinese foreign policy. I also had a personal connection to one of the cases. I knew Michael Kovrig – he had been one of my counterparts at the Canadian embassy in Beijing – and I had great respect for his work as a diplomat, and later as a senior advisor at the International Crisis Group. Moreover, because I was now on leave from the U.S. Department of State to serve as a Council on Foreign Relations International Affairs Fellow in Canada, I had time to look for some answers. And so I began trying to identify and analyze similar cases from the recent past. This paper is the result. It represents my own views, and although the Department of State has allowed me to publish it in my personal capacity, it does not necessarily reflect the views of the Department or the U.S. government.
Topic:
Foreign Policy, Diplomacy, International Affairs, Prisons/Penal Systems, and Finance
Political Geography:
China, Canada, Asia, North America, and United States of America

46. Responding to Kissinger: The Risks of Remodeling Neoliberalism and Manipulating the Enlightenment values

Author:
Mohammed Cherkaoui
Publication Date:
04-2020
Content Type:
Special Report
Institution:
Al Jazeera Center for Studies
Abstract:
Kissinger aims to skip any debate of the financial elitist performance of Neoliberalism. He seeks to dissipate concerns over a post-Coronavirus reality with some romanticized Enlightenment values. He expects the world’s democracies “to defend and sustain their Enlightenment values.”
Topic:
Finance and Neoliberalism
Political Geography:
North America and United States of America

47. Automatic stabilizers in a low-rate environment

Author:
Olivier Blanchard and Lawrence H. Summers
Publication Date:
02-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
With interest rates persistently low or even negative in advanced countries, policymakers have barely any room to ease monetary policy when the next recession hits. Fiscal policy will have to play a major and likely dominant role in stimulating the economy, requiring policymakers to fundamentally reconsider fiscal policy. Blanchard and Summers argue for the introduction of what they call “semiautomatic” stabilizers. Unlike purely automatic stabilizers (mechanisms built into government budgets that automatically—without discretionary government action or explicit triggers—increase spending or decrease taxes when the economy slows or enters a recession), semiautomatic stabilizers are targeted tax or spending measures that are triggered if, say, the output growth rate declines or the unemployment rate increases beyond a specified threshold. The authors argue that the trigger should be changes in unemployment rather than changes in output, and the design of semiautomatic stabilizers, whether they focus on mechanisms that rely primarily on income or on intertemporal substitution effects (changing the timing of consumption), depends crucially on the design of discretionary policy.
Topic:
Economics, Government, Monetary Policy, and Finance
Political Geography:
Global Focus and United States of America

48. New Developments in China's Financial and Economic System

Author:
Ronald Schramm
Publication Date:
11-2020
Content Type:
Video
Institution:
Weatherhead East Asian Institute, Columbia University
Abstract:
Ronald Schramm, Visiting Associate Professor of International and Public Affairs, Columbia University Moderated by: Shang-Jin Wei, N. T. Wang Professor of Chinese Business and Economy and Professor of Finance and Economics, Columbia Business School Professor Jin Wei will interview Ron Schramm about new and important developments in China’s financial and economic system since the first edition of Schramm's textbook in 2015 (Routledge/Taylor&Francis): China Macro Finance: A US Perspective. Both new reforms and retrenchments in the Chinese economy will be discussed as well as the fraught economic relationship with the United States. Students and scholars of China will benefit by putting their own research in the context of how far China has come and where it is going in terms of economic and financial reform.
Topic:
Development, Diplomacy, Economics, Reform, Finance, and Business
Political Geography:
China, Asia, and United States of America

49. International Strategy to Better Protect the Financial System Against Cyber Threats

Author:
Tim Maurer and Arthur Nelson
Publication Date:
11-2020
Content Type:
Special Report
Institution:
Carnegie Endowment for International Peace
Abstract:
In February 2016, a few months after Carnegie began its work on this project, a cyber attack shook the finance world. Hackers had targeted SWIFT, the global financial system’s main information network, trying to steal 1 billion U.S. dollars, nearly 0.50 percent of Bangladesh’s GDP, from the Bangladeshi central bank over the course of a weekend. It was a wake-up call revealing that cyber threats targeting the financial sector were no longer limited to low-level theft but could now pose systemic risk. Only a few months earlier, in 2015, the Carnegie Endowment for International Peace had launched an initiative to better protect the global financial system against cyber threats. Our first step was to develop a proposal for the G20 to launch a work stream dedicated to cybersecurity in the financial sector. In March 2017, the G20 Finance Ministers and Central Bank Governors outlined an initial road map to increase the cyber resilience of the international financial system. In the wake of the Bangladesh incident, Carnegie expanded its work, complementing the G20 project with the development of an action-oriented, technically detailed cyber resilience capacity-building tool box for financial institutions. Launched in 2019 in partnership with the IMF, SWIFT, FS-ISAC, Standard Chartered, the Global Cyber Alliance, and the Cyber Readiness Institute, this tool box is now available in seven languages. And we are continuing to track the evolution of the cyber threat landscape and incidents involving financial institutions through a collaboration with BAE Systems. To raise more awareness among senior officials of the growing threat, Carnegie also hosted a series of roundtables at the Munich Security Conference, including a cyber war game, dedicated to cybersecurity and the financial system. We co-hosted a high-level roundtable with the IMF for central bank governors and launched a workshop series at Wilton Park to strengthen the relationships among financial authorities, industry, and law enforcement as well as national security agencies. In July 2019, an international group—convened by Carnegie—of leading experts in governments, central banks, industry, and the technical community decided that there would be value in developing a longer-term international cybersecurity strategy for the financial system. This report is the result of that project and offers a vision for how the international community could better protect the financial system against cyber threats. The recommendations are designed to inform the deliberations among the G20, the G7, relevant standard-setting bodies as well as the Annual Meeting of the World Economic Forum and the Munich Security Conference. Written by Carnegie experts, this document includes feedback obtained through consultations with more than 200 stakeholders in government, the financial regulatory community, industry, and academia. An international advisory group, formed in fall 2019, provided strategic advice throughout the project. In February 2020, following Carnegie’s presentation of this project at the Forum’s annual meeting in Davos the previous month, the World Economic Forum became an official partner.
Topic:
Science and Technology, Cybersecurity, Finance, and Non-Traditional Threats
Political Geography:
Global Focus and United States of America

50. Covert Foreign Money: Financial Loopholes Exploited by Authoritarians to Fund Political Interference in Democracies

Author:
Josh Rudolph and Thomas Morley
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
In addition to more widely studied tools like cyberattacks and disinformation, authoritarian regimes such as Russia and China have spent more than $300 million interfering in democratic processes more than 100 times spanning 33 countries over the past decade. The frequency of these financial attacks has accelerated aggressively from two or three annually before 2014 to 15 to 30 in each year since 2016. We call this tool of foreign interference “malign finance,” defined as “the funding of foreign political parties, candidates, campaigns, well-connected elites, or politically influential groups, often through non-transparent structures designed to obfuscate ties to a nation state or its proxies.” A typical case involves a regime-connected operative funneling $1 million to a favored political party, although buying influence in a major national election costs more like $3 million to $15 million. Rather than start our analysis by focusing on any given policy area, we review open-source reporting in 16 languages to identify malign finance cases credibly attributed to foreign governments. Finding that approximately 83 percent of the activity was enabled by legal loopholes, we catalogue the resulting caseload into the seven most exploited policy gaps. Broader than just money flowing through straw donors, shell companies, non-profits, and other conduits, malign finance includes a range of support mechanisms innovated by authoritarian regimes to interfere in democracies, from intangible gifts to media assistance. As such, policy strategies to address these vulnerabilities are not limited to campaign finance reforms, but also include greater transparency requirements around media funding, corporate ownership, campaign contacts with foreign powers, and other issues. In addition to identifying loopholes, our case study informs the scope of our recommended policy solutions, which are meant close off channels for foreign financial interference without infringing upon the speech rights of domestic political spenders or jeopardizing bipartisan support. Each of our recommendations balances these trade-offs differently based on empirical, legal, political, and administrative considerations vetted in consultation with more than 90 current and former executive branch officials, Congressional staffers from both parties, constitutional law scholars, and civil society experts. This report is organized around each of the seven U.S. legal loopholes that need to be closed, starting with the most urgent priorities, plus an eighth chapter on the need for stronger governmental coordination.
Topic:
Authoritarianism, Democracy, Finance, Foreign Interference, and Dark Money
Political Geography:
Russia, China, Europe, and United States of America