SEC boss Gensler: AI will trigger a financial crash within a decade18. October 2023
SEC boss Gensler: AI will trigger a financial crash within a decade
New York, October 18, 2023
It is “almost inevitable” that AI will trigger a financial crash within a decade, SEC chief Gary Gensler claimed in an interview with the Financial Times. It is therefore necessary to regulate how AI models are used by banks on Wall Street.
After holding back for a short period of time after ChatGPD was released, banks have increased their commitment. Here are two examples: Last month, Morgan Stanley launched an AI assistant based on OpenAI’s GPT4 model to make it easier for its financial advisors to access market information. Rival JPMorgan has reportedly filed a patent for an AI model called “IndexGPT” that will help traders choose securities to invest in.
Gary Gensler claimed it was “almost inevitable” that AI would trigger a financial crash as early as the late 2020s or early 2030s. His reasoning: reliance on models developed by technology companies could lead to economic chaos.
That’s why Gensler called for AI regulation that takes into account both the underlying AI models used by tech companies and their use by Wall Street banks, calling it a “cross-regulatory challenge.”
“It’s a difficult financial stability problem to solve because most of our regulations are on individual institutions, individual banks, individual money market funds, individual brokers; it is simply the nature of what we do.
“And this is a horizontal issue where many institutions may rely on the same underlying base model or the same underlying data aggregator.”