Renowned author, philosopher, and history professor Yuval Noah Harari has expressed concerns about the unchecked deployment of artificial intelligence (AI) in the financial sector. Speaking at the Bank for International Settlements (BIS) Innovation Summit, Harari emphasized the necessity of robust institutions to oversee AI’s impact.
According to Harari, the financial system relies on trust, as it enables diverse individuals to collaborate towards shared objectives through money, bonds, and other financial instruments. However, he highlighted that financial regulations have not been designed in a comprehensible manner for human understanding.
Citing the 2007-2008 financial crisis as an example, Harari pointed out that regulators struggled to comprehend and effectively regulate new financial products, leading to catastrophic consequences. He cautioned that AI, as an alien form of intelligence, could generate financial instruments that surpass human imagination, potentially shifting power from politicians and regulators to algorithms. In such a scenario, trust would be established between AI systems rather than individuals, forcing politicians and regulators to rely on AI during financial crises.
Harari warned that this disruption of trust could result in social instability, as trust in politicians and institutions is already diminishing. He stressed that regulation should not be entrusted solely to geniuses or charismatic leaders but should be guided by institutions in order to ensure human involvement.
However, Harari acknowledged that even with institutional oversight, there are inherent risks. Significant world-changing innovations often require multiple unsuccessful attempts before achieving success. Harari illustrated this by mentioning failed ideologies such as imperialism, communism, and Nazism, which resulted in numerous casualties. Furthermore, AI has the capability to generate ideas on how to utilize itself.
In order to establish a stable and human-friendly future financial system, Harari urged regulators to focus on building trust between individuals. This, he believed, would be essential in navigating the challenges posed by AI.
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