US highlights AI as risk to financial system for first time
Al Jazeera
Financial Stability Oversight Council says emerging technology poses ‘safety-and-soundness risks’ as well as benefits.
Financial regulators in the United States have named artificial intelligence (AI) as a risk to the financial system for the first time.
In its latest annual report, the Financial Stability Oversight Council said the growing use of AI in financial services is a “vulnerability” that should be monitored.
While AI offers the promise of reducing costs, improving efficiency, identifying more complex relationships and improving performance and accuracy, it can also “introduce certain risks, including safety-and-soundness risks like cyber and model risks,” the FSOC said in its annual report released on Thursday.
The FSOC, which was established in the wake of the 2008 financial crisis to identify excessive risks in the financial system, said developments in AI should be monitored to ensure that oversight mechanisms “account for emerging risks” while facilitating “efficiency and innovation”.
Authorities must also “deepen expertise and capacity” to monitor the field, the FSOC said.
