Quantum computing and the financial system: opportunities and risks

Raphael Auer, Angela Dupont, Leonardo Gambacorta, Joon Suk Park, Koji Takahashi and Andras Valko

No 149 in BIS Papers from Bank for International Settlements

Abstract: Quantum computers are still in an experimental phase, but in the future, they may have a profound impact on the financial system. By providing faster and potentially more efficient solutions, quantum computers have the potential to solve certain complex problems that are of paramount interest in the field of economics and finance. For example, quantum simulation algorithms can be leveraged in stress testing and macroeconomic analysis, and quantum optimisation can be used in asset pricing. Meanwhile, the advent of quantum computers also introduces a potential threat to financial stability, especially through their ability to breach some of the most widely used cryptographic algorithms. Despite the nascent state of quantum computing development, the potential for sensitive data to be stored now with the intention to be decrypted later necessitates immediate preparation. This paper explores the transformative potential of quantum mechanics and its applications to the financial system, including the potential benefits as well as the main risks. It also highlights current actions within the central bank community to address these potential risks, including Project Leap, started by the Bank for International Settlements Innovation Hub, the Banque de France and Deutsche Bundesbank.

Date: 2024 Written 2024-10
ISBN: 978-92-9259-794-8
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