SEC chair warns centralized AI could lead to ‘fragile’ financial system
Securities and Exchange Commission (SEC) Chair Gary Gensler said Wednesday that a centralized artificial intelligence (AI) market with just a handful of models that financial actors rely on could lead to a fragile financial system.
Gensler, speaking in a virtual fireside chat hosted by Public Citizen, said he expects AI to tend toward centralization, likening it to the cloud provider and search engine markets.
“Count up on the fingers of one hand how many cloud providers we have in the US, and in even fewer fingers on the hand how many platforms we have to do search, dominant search in this world,” he said.
“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,” he added.
That pattern would create a “monoculture,” with hundreds or thousands of financial actors relying on a central data or central choice model, he said.
Gensler said that financial regulators don’t have oversight over the “central nodes” that likely the whole financial sector will be reliant on.
“And if those nodes have it wrong, the monoculture goes one way, well, then there’s a risk in this society and the financial sector at large,” Gensler said.
Regulators in the U.S. and internationally must think about how to keep diversity in the system, he said.
“Diversity of models and diversity of data sources. Otherwise you end up with a pretty fragile system,” he added.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Securities and Exchange Commission (SEC) Chair Gary Gensler said Wednesday that a centralized artificial intelligence (AI) market with just a handful of models that financial actors rely on could lead to a fragile financial system.
Gensler, speaking in a virtual fireside chat hosted by Public Citizen, said he expects AI to tend toward centralization, likening it to the cloud provider and search engine markets.
“Count up on the fingers of one hand how many cloud providers we have in the US, and in even fewer fingers on the hand how many platforms we have to do search, dominant search in this world,” he said.
“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,” he added.
That pattern would create a “monoculture,” with hundreds or thousands of financial actors relying on a central data or central choice model, he said.
Gensler said that financial regulators don’t have oversight over the “central nodes” that likely the whole financial sector will be reliant on.
“And if those nodes have it wrong, the monoculture goes one way, well, then there’s a risk in this society and the financial sector at large,” Gensler said.
Regulators in the U.S. and internationally must think about how to keep diversity in the system, he said.
“Diversity of models and diversity of data sources. Otherwise you end up with a pretty fragile system,” he added.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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