The chairman of the US Securities and Exchange Commission, Gary Gensler, has reportedly said that a financial crisis caused by the widespread use of artificial intelligence is “almost inevitable” without some form of intervention.
The chairman’s comments came during an interview with the Financial Times, in which, according to the article, Gensler said the crisis could come within a decade.
The chairman’s concerns seem to revolve around the centralisation of AI models and cloud service providers.
Alongside cryptocurrency regulation, artificial intelligence has become one of the SEC’s biggest regulatory challenges. According to the Financial Times, Gensler is concerned that an over-reliance on similar models (e.g. ChatGPT) could lead to herd behaviour on Wall Street and across US financial markets.
Gensler’s stance is not new. In 2020, Gensler co-authored a research paper titled “Deep Learning and Financial Stability” in which he took a similar stance with Lily Bailey, then an MIT research assistant but now working at the SEC as assistant to the chief of staff, according to her LinkedIn page.
According to the 2020 paper, the increasing use of artificial intelligence systems in the financial system “could lead to financial system fragility and economy-wide risks”.
The paper goes on to make an implicit call for government regulation, saying that “existing financial sector regulatory regimes – built in an earlier era of data analytics technology – are likely to be insufficient to address the systemic risks posed by the widespread adoption of deep learning in finance.”
