HKMA's Quantum Readiness Index shows banks are ill-prepared for quantum computing threats, with a score of 2.3 out of 10.
The Hong Kong Monetary Authority (HKMA) has launched a Quantum Readiness Index (QPI) to assess the banking sector's preparedness for quantum computing threats, revealing a low initial score of 2.3 out of 10.
In conjunction with the QPI, the HKMA published a white paper outlining necessary steps for financial institutions to mitigate risks posed by quantum computing. The report found that 32% of the banks surveyed have not yet made strides towards adopting post-quantum security protocols, with nearly half lacking a structured plan. However, approximately 68% of banks acknowledge the risks and are either preparing or piloting solutions.
About one-third of participants are currently exploring or testing quantum-related initiatives, and nearly half have engaged in discussions about these threats at the board level.
HKMA aims to boost the sector's QPI score to a perfect 10 by 2030. To facilitate this goal, the authority plans to collaborate with the Hong Kong University of Science and Technology and industry stakeholders to develop post-quantum cryptography tools and provide relevant training.
The white paper highlights that quantum computers using Shor's algorithm could jeopardize commonly used cryptographic systems, including RSA and elliptic curve cryptography.
HKMA has recommended that banks take inventory of their cryptographic systems, evaluate potential vulnerabilities, and formulate migration strategies, noting that replacing existing security systems can be a lengthy process.
Additionally, the authority connected quantum risk preparations to the expanding trend of tokenization in Hong Kong's financial landscape. Since 2023, the government has issued three series of tokenized green bonds, accumulating a total of approximately 16.8 billion Hong Kong dollars.
In June, HKMA created a task force to enhance tokenization in the debt market. Notably, HSBC has been mentioned as a pioneer, testing quantum-safe technologies for transactions involving tokenized gold slated for 2024.
Concerns were raised by Eddie Zervigon, CEO of Quantum Xchange, who indicated that Bitcoin and other cryptocurrencies could soon face significant risks as quantum technology evolves and threatens existing cryptographic frameworks.
