Tan Kin Lian - Perspectives Total breakdown of digital payment
Recently, there were a few instances of a failure of online banking systems, affecting a few banks in Singapore. The cause were identified as database issue or connection issue. This breakdown appears to be occurring regularly. 

This is not confined to Singapore. There was a major breakdown of a large banks in America. It was suspected that a large bank in China was a victim of a computer attack and had to pay a ransom to the backers. 

These breakdowns cause some inconvenience. The customers could not make their electronic payment. However, the inconvenience was temporary as services was resumed after a few hours or maybe a day or two. It only affected the customers of that bank. 

We have to prepare for a day when the breakdown affects all the banks and last for several days, or longer. 

The risk of a widespread failure is extremely low. The banks use different data centers and power sources. This allows the risks to be diversified, and not concentrated. While some parts of the banking or power system may be down, the other parts will continue to operate. 

The risk may be more severe if it affects the servers that process the transactions between the banks. This concentration risks might be lessened by providing redundancy with several servers can performing the same function, and being reliant on several locations and power sources.

Perhaps, as a final backup, the banking systems should still continue to use paper currency as a legal form of tender. If electronic payment fails, payment can still be made with paper currency. 

A more practical arrangement is to have the CBDC (central bank digital currency) operate on a network that is entirely different from the banking system. Even if there is failure in the network that links all the banks, the CBDC can still operate on a separate system. 

Tan Kin Lian 
 

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