Bank Transfers Frozen in Japan as Major Glitch Hits Big Banks
Engineers are currently investigating a banking glitch that caused a complete shutdown of bank transfers worth billions of dollars in Japan. The glitch began on Tuesday, affecting over one million customers and major banking institutions such as JPMorgan Chase, MUFG, and Mitsubishi Trust.
The breakdown in the system resulted in a staggering $81 billion in transfers being halted. It took engineers more than a day to fix the issue. The failure was centered around an interbank communication system called Zengin, which forced banks to resort to a backup system for processing transactions.
MUFG, Japan’s largest bank, stated that online transfers to other banks and transactions at ATMs and convenience stores were denied while Zengin worked to identify the cause of the problem and recalibrate the system. Zengin is now focused on preventing similar failures from occurring in the future.
Previous Incidents of Fund Transfer Disruptions
This is not the first time that individuals and businesses have faced difficulties in transferring funds. In 2020, the Euro’s real-time gross settlement system known as TARGET2 experienced issues, causing several European banks to be unable to process cross-border Euro transfers. Similarly, in 2018, the UK’s Faster Payments Service suffered an outage that affected customers at HSBC, Barclays, and Lloyds.
Hot Take: Banking Glitches Highlight Vulnerabilities in Traditional Systems
The recent banking glitch in Japan serves as a reminder of the vulnerabilities present in traditional banking systems. Despite advancements in technology, disruptions like these continue to impact millions of customers and halt significant amounts of money. As the world moves towards digital currencies and decentralized finance, incidents like this emphasize the need for more robust and resilient financial infrastructure. Blockchain technology and cryptocurrencies offer potential solutions by providing faster, more secure, and decentralized alternatives to traditional banking systems. Implementing these technologies could help mitigate the risks associated with centralized systems and prevent such widespread failures in the future.
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