{"id":20083,"date":"2023-07-19T04:27:14","date_gmt":"2023-07-19T04:27:14","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/nft\/sec-chair-warns-of-heightened-financial-fragility-from-ai\/"},"modified":"2023-07-19T04:27:33","modified_gmt":"2023-07-19T04:27:33","slug":"sec-chair-warns-of-heightened-financial-fragility-from-ai","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/nft\/sec-chair-warns-of-heightened-financial-fragility-from-ai\/","title":{"rendered":"SEC Chair Warns of Heightened Financial Fragility from AI"},"content":{"rendered":"<div>\n<p class=\"\">In a recent address to the National Press Club in Washington, Gary Gensler, Chair of the U.S. Security and Exchange Commission (SEC), expressed concern over the potential economic instability that could arise from the monopolization of artificial intelligence development by major tech corporations, particularly for applications in financial markets.<\/p>\n<p>Gensler emphasized the potential for AI to amplify financial instability, suggesting that the technology could encourage a herd mentality among individual market actors. This could occur if these actors make similar decisions based on identical signals received from a fundamental model or data aggregator.<\/p>\n<p>\u201cModel risk management tools, while lowering overall risk, primarily address firm-level, or so-called micro-prudential, risks,\u201d Gensler said. \u201cMany of the challenges to financial stability that AI may pose in the future, though, will require new thinking on system-wide or macro-prudential policy interventions.\u201d<\/p>\n<h2 class=\"wp-block-heading\" id=\"h-preventive-solutions-to-potential-ai-problems\">Preventive solutions to potential AI problems<\/h2>\n<p>The solution, according to the SEC Chair, is having agency staff propose regulations that could mitigate such potential conflicts.\u00a0<\/p>\n<p>\u201cIn the financial sector, there may be conflicts if advisers or brokers prioritize their interests over those of their investors,\u201d Gensler stated as he highlighted the potential for AI to be manipulated to favor intermediaries at the expense of investors.\u00a0\u201cThat\u2019s why I\u2019ve asked SEC staff to make recommendations for rule proposals for the Commission\u2019s consideration regarding how best to address such potential conflicts across the range of investor interactions.\u201d<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><\/figure>\n<p>Touching on securities laws \u2014 without mentioning the current lawsuits the SEC is embroiled in with the crypto industry \u2014 Gensler said that, while the regulatory body is \u201ctechnology neutral,\u201d securities laws, \u201cmay be implicated depending upon how AI technology is used.\u201d <\/p>\n<p>The SEC Chair\u2019s remarks come at a time when AI innovation is rapidly advancing. The recent unveiling of GPT-4, a powerful AI tool from OpenAI, alongside a plethora of other developments in the industry, has sparked fears of widespread job losses due to automation as well as concern for its ability to pollute an already troubled information ecosystem online. <\/p>\n<p>While Gensler did not provide specific details during his speech on how AI applications might impact the global financial system or what decisions they might influence, he did caution that the lack of regulation could pose a threat to the global economy, something he attributed to the potential of AI to intensify the inherent network interconnectedness of the global financial system.<\/p>\n<p>Gensler argued that existing risk management tools are insufficient to counter the risks posed by advanced AI to the U.S. and global financial systems, pointing out that current safeguards have become obsolete in the face of breakthroughs in data analytics.<\/p>\n<p>\u201cAI may play a central role in the post-mortem analysis of a future financial crisis,\u201d Gensler warned in his concluding remarks. <\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In a recent address to the National Press Club in Washington, Gary Gensler, Chair of the U.S. Security and Exchange Commission (SEC), expressed concern over the potential economic instability that could arise from the monopolization of artificial intelligence development by major tech corporations, particularly for applications in financial markets. Gensler emphasized the potential for AI [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":20084,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"footnotes":""},"categories":[43],"tags":[],"class_list":["post-20083","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-nft"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SEC Chair Warns of Heightened Financial Fragility from AI | NFT &amp; Crypto News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nftandcrypto-news.com\/nft\/sec-chair-warns-of-heightened-financial-fragility-from-ai\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SEC Chair Warns of Heightened Financial Fragility from AI | NFT &amp; Crypto News\" \/>\n<meta property=\"og:description\" content=\"In a recent address to the National Press Club in Washington, Gary Gensler, Chair of the U.S. Security and Exchange Commission (SEC), expressed concern over the potential economic instability that could arise from the monopolization of artificial intelligence development by major tech corporations, particularly for applications in financial markets. 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