The UK’s Financial Conduct Authority (FCA) and Bank of England (BOE) recently published a discussion paper seeking views on the regulation of AI use in financial services.
While the paper does lay out the benefits of these technologies to consumers, it also points to several risks: consumer harm, discrimination, and financial exclusion. Similarly, while AI may help to increase competition, it could also be misused to enable anti-competitive behavior like collusion. And there are potential macroeconomic risks, as models may become correlated and cause herding or procyclical behavior at times of market stress.
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