U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has issued a warning about the potential for artificial intelligence (AI) to trigger a financial crisis in the next decade. Gensler raised this concern during his participation in the Financial Stability Board and Financial Stability Oversight Council. He emphasized that this is a challenge that requires cross-regulatory action. In an interview with the Financial Times, Gensler stated that without prompt regulatory measures, a financial crisis caused by AI is “nearly unavoidable” in the coming years.
Gensler explained that the issue arises from the fact that current regulation primarily focuses on individual institutions rather than the broader picture. He highlighted the horizontal dimension of the problem, where multiple institutions may rely on the same underlying AI model or data aggregator. Updating existing regulations alone would not adequately address this horizontal challenge. The SEC chairman also expressed concern about the concentration of base models in big tech companies and the limited number of cloud providers in the country that offer AI as a service. Gensler’s warning stems from his worries about herd behavior among entities using identical data models, which could potentially jeopardize financial stability and become a catalyst for another crisis.
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