US Securities and Exchange Commission (SEC) boss Gary Gensler says a financial crisis brought on by artificial intelligence (AI) will be “nearly unavoidable” without swift and meaningful action by regulators.
In an interview with Financial Times, Gensler suggested that because more and more Wall Street firms are using AI to detect fraud and conduct market surveillance, multiple institutions might base their decisions on the same data models. The ensuing herd mentality could ‘undermine stability’ and accidentally unleash another crisis that would lead to recession, Gensler said.
“I do think we will in the future have a financial crisis, and in the after-action reports, people will say ‘Aha! There was either one data aggregator or one model we’ve relied on,” he said, adding “Maybe it’s in the mortgage market, maybe it’s in some sector of the equity market.”
In other words, there’s a new scapegoat in town!
Gensler predicts that the AI-driven financial crisis could happen as soon as the end of the current decade, or the early 2030s.
As the Epoch Times notes, AI regulation is an uphill battle.
While Mr. Gensler does see more regulation around AI as necessary, he does concede that shaping AI regulation will be a “hard challenge.”