Emerging technology, such as artificial intelligence (AI), has been identified as a risk to the financial system by the Financial Stability Oversight Council (FSOC) in the United States. While AI offers potential benefits such as reduced costs and improved efficiency, it also presents safety-and-soundness risks, including cyber and model risks.
The FSOC, established after the 2008 financial crisis, has emphasized the importance of monitoring developments in AI and ensuring that oversight mechanisms account for emerging risks while facilitating innovation. US Treasury Secretary Janet Yellen, who chairs the FSOC, highlighted the need to support responsible innovation in AI while maintaining existing principles and rules for risk management.
The uptake of AI in the financial industry is expected to increase, prompting the FSOC to play a role in monitoring emerging risks. However, concerns have been raised globally about the ethical implications of AI development, including issues related to individual privacy, national security, and copyright infringement.
In a recent survey, tech workers involved in AI research expressed concerns about the lack of ethical safeguards in their workplaces, despite public pledges from their employers to prioritize safety. In response to these concerns, European Union policymakers have agreed on legislation that will require AI developers to disclose data used to train their systems and conduct testing of high-risk products.