Artificial intelligence is one of the potential risks to financial stability
In the US, the Financial Stability Oversight Council has identified the use of artificial intelligence in financial services as an emerging vulnerability in the financial system for the first time this year.
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The Financial Stability Oversight Council met under the chairmanship of US Treasury Secretary Janet Yellen.
Federal Reserve (Fed) Chair Jerome Powell, Acting Comptroller of the Currency Michael Hsu, Securities and Exchange Commission (SEC) Chair Gary Gensler, and Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg were among those who attended the meeting.
In her opening remarks, Yellen stated that despite facing tighter financial conditions and increased global economic uncertainty last year, the US financial system has remained resilient.
USE OF ARTIFICIAL INTELLIGENCE WILL INCREASE FURTHER
Noting that the Council continues to fulfill its mandate to enhance the resilience of the financial system and monitor a wide range of vulnerabilities, Yellen noted that risks stemming from high interest rates and additional fiscal uncertainty will continue to be assessed.
Janet Yellen emphasized that the Council has identified the use of artificial intelligence in financial services as a vulnerability in the financial system this year, pointing out that the use of AI may accelerate as financial institutions continue to evaluate and adopt innovative technologies.
US Treasury Secretary Yellen expressed that supporting responsible innovation in this area could allow for increased efficiency in the financial system, but that there are also existing principles and rules that must be applied regarding risk management.
Meanwhile, the Financial Stability Oversight Council also unanimously approved its 2023 annual report.
The report also emphasized that the use of artificial intelligence could bring certain risks, including security risks such as cyber risks and model risks.
The report recommended that financial institutions, market participants, and regulatory and supervisory authorities deepen their expertise and capacity to monitor AI innovations and their usage, and to identify emerging risks.