US Regulators Highlight AI as Potential Financial Stability Risk
The Financial Stability Oversight Council Holds Meeting Under Chairmanship of US Treasury Secretary Yellen
The Financial Stability Oversight Council recently convened under the chairmanship of US Treasury Secretary Janet Yellen. The meeting was attended by notable figures such as US Federal Reserve Chairman Jerome Powell, Office of the Comptroller of the Currency Chairman Michael Hsu, US Securities and Exchange Commission Chairman Gary Gensler, and US Federal Deposit Insurance Corporation Chairman Martin Gruenberg.
During her opening speech, Yellen emphasized that despite facing tighter financial conditions and increasing global economic uncertainty last year, the US financial system remains resilient. She highlighted the Council’s commitment to increasing the resilience of the financial system and monitoring a wide range of vulnerabilities, particularly those stemming from high interest rates and additional financial uncertainty.
Yellen also addressed the use of artificial intelligence in financial services, identifying it as a vulnerability in the financial system. She noted that the use of artificial intelligence may accelerate as financial institutions continue to evaluate and adopt innovative technologies. While supporting responsible innovation in this field can increase the efficiency of the financial system, Yellen stressed the importance of implementing existing principles and rules regarding risk management.
Additionally, the Financial Stability Oversight Council unanimously approved the 2023 report, which emphasized the potential risks associated with the use of artificial intelligence, including security risks such as cyber risks and model risks. The report recommended that financial institutions, market participants, and regulatory and supervisory authorities deepen their expertise and capacity to monitor AI innovations and their use and identify emerging risks.
The meeting showcased the Council’s ongoing commitment to safeguarding the stability of the US financial system while adapting to technological advancements and emerging risks. As the financial landscape continues to evolve, the Council remains dedicated to addressing vulnerabilities and ensuring the resilience of the financial system.
