US Treasury Secretary:
AI in finance poses “significant risks”
According to US Treasury Secretary Janet Yellen, the use of artificial intelligence in the financial sector harbors "significant risks". Although the technology creates new opportunities, vulnerabilities could arise from the complexity and opacity of AI, from risk management that does not sufficiently take AI risks into account and if many market participants use the same data and models.
In contrast, Yellen cites the further automation of services for customers, greater efficiency, better fraud detection and the fight against illegal financial activities as advantages of AI. Advances in speech processing and image recognition as well as generative AI could make financial services more cost-effective and easier to access. Her department is using AI tools at the IRS to detect fraud.
Yellen gave her speech at an AI conference of the Financial Stability Oversight Council (FSOC), which reports to her ministry. The task of the authority, which was founded in 2010, is to identify and respond to risks to the financial stability of the USA. It monitors all major financial companies and the financial markets as a whole.
The FSOC will "continue to monitor the impact of AI on financial stability", announced Yellen. There should also be better coordination on the topic among the supervisory authorities.
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