World Economic Forum warns that artificial intelligence may destabilize the financial system.

Jonah Whanau

2018-08-19 10:34:00 Sun ET

The World Economic Forum warns that artificial intelligence may destabilize the financial system. Artificial intelligence poses at least a trifecta of major risks to the financial ecosystem. First, inadequate user data validation and authentication may threaten consumer consent and privacy. The recent Facebook-driven Cambridge Analytica debacle causes major user privacy concerns and worries about the use and abuse of artificial intelligence applications in macrofinance and other financial services.

In August 2018, Google, Facebook, and Twitter have to remove numerous pages and posts to clean up their social networks due to Russian and Iranian inauthentic coordination for political purposes. Also, the Trump administration further blocks the potential acquisitions of U.S. electronic payment service providers by China's Ant Financial Group due to national economic security concerns. Tech platforms such as Facebook, Google, Apple, Amazon, and Microsoft should share the blame for egregious user privacy invasion and non-authentic user data access.

Second, technological advances in both cloud-computing power and algorithmic trade telecommunication help mold a highly non-linear and dense financial network. As an inadvertent consequence, one node of this network can cause exogenous shocks to propagate quickly and unpredictably to other parts of the global financial ecosystem.

As an inadvertent consequence, one node of this network can cause exogenous shocks to propagate quickly and unpredictably to other parts of the global financial ecosystem. Typical examples include the U.S. subprime mortgage crisis and the European sovereign debt crisis with severe socioeconomic malaise throughout the global economic recession from 2008 to 2012.

Third, artificial intelligence applications may induce online financial service users to engage in risky transactions that expose them to fraud or other cyber hazards. For instance, Bitcoin, Ethereum, Litecoin, and other cryptocurrencies exhibit highly volatile price fluctuations and hefty techy barriers to entry. Some of these crypto-currencies may involve esoteric investment projects in financial crime, collusion, or terrorist finance. In fact, several famous financial market experts such as Warren Buffett, Jamie Dimon, and Jim Cramer recommend stock investors to refrain from trading cryptocurrencies. Cryptocurrencies cannot be a valid authentic medium of exchange because only a few countries accept them as fiat money or legal tender. Neither can these cryptocurrencies serve as a reasonable store of value because the vast majority of them exhibit extreme price variation within a short time frame.

Overall, most current artificial-intelligence-driven financial applications raise these concerns and so may destabilize the global network of financial service providers.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

PayPal earns great fintech reputation from its massive worldwide network of 250+ million users.

Peter Prince

2018-10-19 13:37:00 Friday ET

PayPal earns great fintech reputation from its massive worldwide network of 250+ million users.

PayPal earns great fintech reputation from its massive worldwide network of 250+ million active users. As PayPal beats the revenue and profit expectations o

+See More

Trump administration imposes 20%-50% tariffs on Turkish imports due to a recent spat over the detention of an American pastor.

Apple Boston

2018-08-11 14:35:00 Saturday ET

Trump administration imposes 20%-50% tariffs on Turkish imports due to a recent spat over the detention of an American pastor.

The Trump administration imposes 20%-50% tariffs on Turkish imports due to a recent spat over the detention of an American pastor, Andrew Brunson, in Turkey

+See More

Global climate change can cause an adverse impact on long-term real GDP economic growth.

Dan Rochefort

2019-10-27 17:37:00 Sunday ET

Global climate change can cause an adverse impact on long-term real GDP economic growth.

International climate change can cause an adverse impact on long-term real GDP economic growth. USC climate change economist Hashem Pesaran and his co-autho

+See More

Macro eigenvalue volatility helps predict some recent episodes of high economic policy uncertainty.

James Campbell

2020-09-15 08:38:00 Tuesday ET

Macro eigenvalue volatility helps predict some recent episodes of high economic policy uncertainty.

Macro eigenvalue volatility helps predict some recent episodes of high economic policy uncertainty, recession risk, or rare events such as the recent rampan

+See More

President Trump tweets his key decision to oust State Secretary Rex Tillerson due to intense disagreement over diplomatic affairs.

Fiona Sydney

2018-03-07 07:34:00 Wednesday ET

President Trump tweets his key decision to oust State Secretary Rex Tillerson due to intense disagreement over diplomatic affairs.

President Trump tweets his key decision to oust State Secretary Rex Tillerson after several months of intense disagreement over diplomatic affairs. Trump so

+See More

Citron Research short-sellers initiate a class-action lawsuit against Tesla and its executive chairman Elon Musk.

Monica McNeil

2018-09-05 08:34:00 Wednesday ET

Citron Research short-sellers initiate a class-action lawsuit against Tesla and its executive chairman Elon Musk.

Citron Research short-sellers initiate a class-action lawsuit against Tesla and its executive chairman Elon Musk because he might have deliberately orchestr

+See More