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arXiv · 2310.11293

On the use of artificial intelligence in financial regulations and the impact on financial stability

Jon Danielsson·Andreas Uthemann
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Abstract

Artificial intelligence (AI) can undermine financial stability because of malicious use, misinformation, misalignment, and the AI analytics market structure. The low frequency and uniqueness of financial crises, coupled with mutable and unclear objectives, frustrate machine learning. Even if the authorities prefer a conservative approach to AI adoption, it will likely become widely used by stealth, taking over increasingly high-level functions driven by significant cost efficiencies and superior performance. We propose six criteria for judging the suitability of AI.

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Jon Danielsson, Andreas Uthemann. 2023-10-17. On the use of artificial intelligence in financial regulations and the impact on financial stability. https://arxiv.org/abs/2310.11293

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