The Financial Stability Board, the G20’s main financial regulator, has laid out plans to keep a closer eye on artificial intelligence risks. It’s a wake-up call for the money world, as AI becomes more powerful.
The FSB warned in a report on October 10 that banks and financial firms relying too much on the same AI models and special hardware could cause big problems. If everyone uses the same tools, they might all act in the same way, creating a “herd behavior” risk. This heavy reliance on a few tech options also creates weak spots. Think of it like a single point of failure. New cyber threats linked to AI and clever AI-powered fraud are also on their radar.
Interestingly, the FSB noted that AI might add stress to financial markets. But they also said there isn’t much proof yet that AI-driven markets directly change how the markets perform overall. It seems we’re still in the early days of understanding the full impact.
Meanwhile, a study from the Bank for International Settlements (BIS) echoes this concern. The BIS is an international group where many central banks are partners. Their research points to an urgent need for central banks, financial regulators, and government agencies to step up their game with AI.
The BIS explained that these organizations must get better at two things. First, they need to understand new technology as observers. This means truly grasping what AI is doing and where it’s headed. Second, they need to improve their own skills as users of AI technology. It’s about being smart both inside and outside the AI box.