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US financial regulators have designated artificial intelligence (AI) as a risk to the financial system for the first time. This announcement was made in the latest annual report of the Financial Stability Oversight Council (FSOC).
The FSOC, formed in response to the 2008 financial crisis, acknowledged the benefits of AI, such as cost reduction, efficiency improvement, and enhanced performance. However, the Council also pointed out the potential dangers associated with AI. “AI can also introduce certain risks, including safety-and-soundness risks like cyber and model risks,” the FSOC noted in its report.
US Treasury Secretary Janet Yellen, who chairs the FSOC, emphasized the need for vigilance as the financial sector adopts AI and other emerging technologies. “Supporting responsible innovation in this area can allow the financial system to reap benefits like increased efficiency, but there are also existing principles and rules for risk management that should be applied,” Yellen stated.
This focus on AI aligns with broader concerns globally about the rapid advancement of AI technology and its ethical ramifications, as well as recent actions by the European Union to enforce transparency and safety in AI development.