US Securities and Exchange Commission Warns Chatbots Like ChatGPT May Fuel Global Market Panic
“The possibility of one or even a small number of AI platforms dominating raises issues with regard to financial stability. The recent advances in generative AI models make these challenges more likely,” he said.
San Francisco, July 18: As ChatGPT-driven financial posts begin to thrive on social media and investment gurus take AI help to disseminate information, the US Securities and Exchange Commission (SEC) has expressed concern about generative AI’s impact on financial markets globally. According to SEC Chair Gary Gensler, generative AI hikes the possibility of institutions relying on the same subset of information to make decisions.
“The possibility of one or even a small number of AI platforms dominating raises issues with regard to financial stability. The recent advances in generative AI models make these challenges more likely,” he said. Bard, Google AI Chatbot, Now Available in Nine Indian Languages.
According to him, AI may heighten financial fragility as it could promote herding with individual actors making similar decisions because they are getting the same signal from a base model or data aggregator.
“This could encourage monocultures. It also could exacerbate the inherent network interconnectedness of the global financial system,” the SEC chair said in a speech late on Monday. “Thus, AI may play a central role in the after-action reports of a future financial crisis,” he cautioned.
If an AI model provides inaccurate or irrelevant information, financial institutions may end up using the same flawed data and making the same wrong decisions, heralding the risk of something like the massive 2008 financial crisis. Google’s ChatGPT Rival Bard AI Chatbot Shines in Its Performance; All the Facts and Do’s and Don’ts of Using Bard.
Gensler said that while current model risk management guidance -- generally written prior to this new wave of data analytics -- will need to be updated, it will not be sufficient.
“Many 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,” he noted. -
(The above story first appeared on LatestLY on Jul 18, 2023 05:06 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).