Global financial watchdogs to ramp up monitoring of AI
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AI (Artificial Intelligence) letters and robot hand are placed on computer motherboard in this illustration created on June 23, 2023. REUTERS/Dado Ruvic/Illustration
By Marc Jones
LONDON (Reuters) -Global financial regulators have laid out plans for closer monitoring of artificial intelligence risks as banks and other parts of the financial industry ramp up the use of AI.
Banks have been broadly optimistic that AI will make them more productive, but regulators around the world have expressed concerns about its potential impact on financial stability.
The G20's risk watchdog, the Financial Stability Board, said in a report on Friday that if too many institutions end up using the same AI models and specialised hardware, this could lead to herd-like behaviour.
"This heavy reliance can create vulnerabilities if there are few alternatives available," the board said.
A separate study published by the central bank umbrella group, the Bank for International Settlements, added there was an "urgent need" for central banks, financial regulators and supervisory authorities to "raise their game" in relation to AI.
"There is a need to upgrade their capabilities both as informed observers of the effects of technological advancements and as users of the technology itself," the BIS said.
The United States, China and other countries around the world are currently racing to lead the development of revolutionary, machine-learning technologies.
The FSB report said that while AI could amplify market stress, there was currently "little empirical evidence that AI-driven market correlations affect market outcomes".
It added that financial institutions were also at risk of more AI-related cyberattacks and AI-driven fraud.
Some regions have already taken the first steps towards regulating AI, including the European Union, whose Digital Operational Resilience Act (DORA) came into force in January.
(Additional reporting by Elizabeth Howcroft; editing by Mark Potter and Mark Heinrich)
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