US Treasury Secretary Janet Yellen shared concerns regarding the risks posed by artificial intelligence (AI) to the financial system during a conference on AI and financial stability on June 6. Yellen emphasized the need for collaboration between the government and private sectors to address these emerging risks.
“This [AI] is a rapidly evolving field. We have our work cut out for us.”
Increased Risks Associated with AI
While recognizing the benefits of AI in the financial sector, such as fraud detection and customer service, Yellen and experts warned about the potential risks, including misuse in scams and market manipulation through misinformation.
“Insufficient or faulty data could also perpetuate or introduce new biases in financial decision-making.”
The Treasury Department solicited insights from stakeholders on the uses, opportunities, and risks of AI in financial services to inform future policymaking.
“The tremendous opportunities and significant risks associated with the use of AI by financial companies have moved this issue toward the top of Treasury’s and the Financial Stability Oversight Council’s agendas.”
AI Industry Scrutiny
Yellen’s warning coincides with increased governmental scrutiny of AI firms like Nvidia and Microsoft over antitrust concerns. US antitrust enforcer Jonathan Kanter plans to investigate the AI sector to prevent monopolies and promote competition.
Kanter stressed the importance of monitoring AI’s competitive landscape, particularly in computing power, data for training large language models (LLMs), cloud services, talent, and hardware.
Real-time regulatory intervention may be necessary to prevent dominant tech firms from monopolizing the AI market, especially regarding the scarcity of GPUs for training LLMs.
