Both providers and consumers of e-finance view
security as a constraint and concern. Serious operational risks and potential liabilities are
associated with security breaches in the transfer of
funds or instructions and the actual theft of
identification information over the Internet (Furst,
Glaessner, and Kellerman 2001). In response,
encryption techniques and various protocols (secure
socket layer, Financial Interchange Extended
language) have been developed by the private
sector. But for the whole set of security
arrangements—that is, the so-called public key
infrastructure, or PKI—to work, four functions must
be present: authentication (knowing the parties
when exchanging information), integrity (messages
cannot be changed during transmission),
nonrepudiation (agreements cannot be later denied),
and confidentiality (messages cannot be read or
copied by unauthorized users). Authentication has
been perhaps the most difficult to address.
Authorities will have to address three main
issues in designing a country’s public key
infrastructure. First, adequate penalties are needed