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
Former IMF chief economist Kenneth Rogoff advocates that artificial intelligence helps augment productivity growth in the next decade.
James Campbell

2018-04-23 07:43:00 Monday ET

Former IMF chief economist Kenneth Rogoff advocates that artificial intelligence helps augment productivity growth in the next decade.

Harvard professor and former IMF chief economist Kenneth Rogoff advocates that artificial intelligence helps augment human productivity growth in the next d

+See More
The Federal Reserve proposes softening the Volcker rule that prevents banks from placing risky bets on securities with deposit finance.
James Campbell

2018-05-27 08:33:00 Sunday ET

The Federal Reserve proposes softening the Volcker rule that prevents banks from placing risky bets on securities with deposit finance.

The Federal Reserve proposes softening the Volcker rule that prevents banks from placing risky bets on securities with deposit finance. As part of the po

+See More
Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes.
Jonah Whanau

2019-07-05 09:32:00 Friday ET

Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes.

Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes. The U.S. government pension and Medicare liabilitie

+See More
President Trump ramps up 25% tariffs on $200 billion Chinese imports soon after China backtracks on the Sino-U.S. trade agreement.
Rose Prince

2019-05-09 10:28:00 Thursday ET

President Trump ramps up 25% tariffs on $200 billion Chinese imports soon after China backtracks on the Sino-U.S. trade agreement.

President Trump ramps up 25% tariffs on $200 billion Chinese imports soon after China backtracks on the Sino-American trade agreement. U.S. trade envoy Robe

+See More
Most lean enterprises should facilitate the dual transformation of both core assets with steady cash flows and new growth options.
John Fourier

2020-06-10 10:35:00 Wednesday ET

Most lean enterprises should facilitate the dual transformation of both core assets with steady cash flows and new growth options.

Most lean enterprises should facilitate the dual transformation of both core assets with fresh cash flows and new growth options. Scott Anthony, Clark Gi

+See More
Dallas Federal Reserve Bank President Robert Kaplan expects the U.S. economy to grow at 2.2%-2.5% in 2019-2020.
Becky Berkman

2019-06-11 12:33:00 Tuesday ET

Dallas Federal Reserve Bank President Robert Kaplan expects the U.S. economy to grow at 2.2%-2.5% in 2019-2020.

Dallas Federal Reserve Bank President Robert Kaplan expects the U.S. economy to grow at 2.2%-2.5% in 2019-2020 as inflation rises a bit. In an interview wit

+See More