Artificial Intelligence now is offering a threat to the world’s financial system, according to someone who should know, Securities and Exchange Commission Chair Gary Gensler.
A report from The Epoch Times that was posted at The Liberty Daily documents his comments during a virtual discussion set up by nonprofit consumer rights advocate Public Citizen.
He charged that the “monoculture” that exists today, of only a few companies controlling a vast amount of the world’s online traffic, creates a “pretty fragile” economic system.
“Count up on the fingers of one hand how many cloud providers we have in the U.S., and in even fewer fingers on the hand how many platforms we have to do search, dominant search in this world,” he explained. “I believe it is likely inevitable that we will have, measured on the fingers of one hand, if not two or three, large base models, and separately the data aggregators.”
The report revealed Google now has 88% of the search engine market, following by Bing and Yahoo! And four companies control two-thirds of the world’s cloud infrastructure, Amazon, Microsoft, Google and Alibaba Cloud.
He pointed out that his federal organization and other regulators don’t have oversight over “central nodes” on which banks depend for information.
He said the threat is that a “monoculture” will develop, and everyone in industry will be dependent.
Individual industries and interests could get it wrong, he said, and if “the monoculture goes one way, well, then there’s a risk in this society and the financial sector at large.”
He insisted that the safest course is a “diversity of models and diversity of data sources.”
Therein lies the threat from AI, he said.
“FactSet data noted that nearly 200 S&P 500 companies cited AI during their second-quarter earnings calls, although this slipped in the third quarter,” the report explained. “However, the prevalence of AI has Mr. Gensler fearing that the financial markets could endure another dot-com bubble of the late 1990s as companies hype AI and then proceed to overpromise and mislead to catch investors’ attention.”
The Epoch Times noted Gensler’s worries focus on the fact that financial markets depend on “very few models” to operate, and AI could take over decision-making by traders by “exploiting massive data sets for predictive capabilities.”
He charged that such a situation creates “herding” in the industry, the report said.
He had said only a few weeks earlier that nearly “unavoidable” is a financial crisis in the coming few years.
“In the after-action reports, people will say ‘Aha! There was either one data aggregator or one model we’ve relied on.’ Maybe it’s in the mortgage market. Maybe it’s in some sector of the equity market.”
Consumer Watchdog’s Justin Kloczko has expressed similar concerns, explaining, “Absent proper regulation, the next financial crisis could be caused by AI. A recession could ignite in the housing or equity market due to a handful of powerful banks relying on a couple of biased algorithms.”
The report said the International Monetary Fund had predicted vast numbers of jobs, up to 40% or even 60% could be impacted by AI, lowering demand for labor and lowering wages.
This article was originally published by the WND News Center.
This post originally appeared on WND News Center.