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

Jon Danielsson and Andreas Uthemann

Papers from arXiv.org

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.

Date: 2023-10, Revised 2024-06
New Economics Papers: this item is included in nep-ain, nep-ban, nep-cmp, nep-fdg and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2310.11293

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