The Financial Stability Board (FSB), a global organization tasked with monitoring and advising the international financial system, has released an in-depth analysis of the impacts of artificial intelligence (AI) on financial services.
The report, published on November 14 and titled “The Financial Stability Implications of Artificial Intelligence,” delves into AI's influence on global financial systems and the strategies to manage associated risks.
Key concerns identified by the FSB include reliance on third-party service providers, cybersecurity threats, and potential market disruptions. The risks of malicious use of generative AI (GenAI) were also emphasized. According to the report, these systems could be exploited by bad actors to perform financial fraud or spread misinformation in financial markets.
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The FSB explicitly cautioned that AI systems operating outside regulatory and ethical boundaries could destabilize the financial system. The report states:
GenAI also increases the potential for financial fraud and disinformation in financial markets. Misaligned AI systems that are not calibrated to operate within legal, regulatory, and ethical boundaries can also engage in behaviour that harms financial stability.
To counter these risks, the FSB proposed several actions. Addressing information gaps and enhancing data monitoring processes are essential to keep pace with AI developments in the financial sector. Moreover, regulators should strengthen collaborations with the private sector, including AI developers, academic institutions, and service providers, to create a robust framework for oversight.
The FSB further recommended that authorities evaluate the adequacy of current regulations in addressing AI-driven risks at both local and global levels.
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