During a speech at the Bank for International Settlements (BIS) Innovation Summit, author, philosopher, and history professor Yuval Noah Harari raised concerns about the uncontrolled integration of artificial intelligence (AI) in the financial system. Here are the key points from his address:
Harari emphasized the importance of strong institutions to regulate and monitor the use of AI in finance. He argued that the financial system relies on trust, which could be compromised if AI creates complex financial devices beyond human understanding.
Harari highlighted the challenge of making financial regulation understandable to the general population. He expressed concern that only a small percentage of people understand how the financial system operates, raising questions about the consequences if this understanding diminishes further.
AI represents a form of intelligence different from human reasoning, with the potential to create financial products beyond human imagination. Harari warned that if trust relationships shift from humans to algorithms, it could lead to social instability, especially considering the declining trust in politicians and institutions.
Harari advocated for a regulatory approach that prioritizes human understanding and involvement in AI-driven financial innovations. He cautioned against leaving regulation solely to geniuses or charismatic leaders, emphasizing the need for institutional oversight.
To ensure the stability and human-friendliness of the future financial system, Harari stressed the importance of building trust between people. He warned against the potential dangers of failed attempts to utilize AI, drawing parallels to historical ideologies like imperialism, communism, and Nazism.
Harari’s address underscores the urgent need for proactive regulation and oversight to manage the integration of AI in finance. By prioritizing human understanding, trust-building, and institutional governance, regulators can mitigate the potential risks and ensure a stable and equitable financial future.
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