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
U.S. automobile and real estate sales decline despite higher consumer confidence and low unemployment as of October 2018.
Fiona Sydney

2018-10-27 09:34:00 Saturday ET

U.S. automobile and real estate sales decline despite higher consumer confidence and low unemployment as of October 2018.

U.S. automobile and real estate sales decline despite higher consumer confidence and low unemployment as of October 2018. This slowdown arises from the curr

+See More
The semiconductor microchip demand-supply imbalance remains severe for American big tech.
Amy Hamilton

2022-05-30 09:32:00 Monday ET

The semiconductor microchip demand-supply imbalance remains severe for American big tech.

The new semiconductor microchip demand-supply imbalance remains quite severe for the U.S. tech and auto industries.  Our current fundamental macro a

+See More
Michael Bloomberg criticizes that the Trump administration's tax reform is a trillion dollar blunder.
Fiona Sydney

2017-12-09 08:37:00 Saturday ET

Michael Bloomberg criticizes that the Trump administration's tax reform is a trillion dollar blunder.

Michael Bloomberg, former NYC mayor and media entrepreneur, criticizes that the Trump administration's tax reform is a trillion dollar blunder because i

+See More
Former LSE Director Howard Davies shares his ingenious insights into the new Basel 4 accord.
Chanel Holden

2018-01-01 06:30:00 Monday ET

Former LSE Director Howard Davies shares his ingenious insights into the new Basel 4 accord.

As former chairman of the British Financial Services Authority and former director of the London School of Economics, Howard Davies shares his ingenious ins

+See More
Fed Chair Janet Yellen confirms with her successor Jerome Powell the final interest rate hike in December 2017.
Joseph Corr

2017-12-14 12:41:00 Thursday ET

Fed Chair Janet Yellen confirms with her successor Jerome Powell the final interest rate hike in December 2017.

Federal Reserve raises the interest rate by 25 basis points to the target range of 1.25% to 1.5% as FOMC members revise up their GDP estimate from 2% to 2.5

+See More
Elon Musk envisions a bold fantastic future with his professional trifecta of lean enterprises SolarCity, SpaceX, and Tesla.
Joseph Corr

2020-04-10 11:33:00 Friday ET

Elon Musk envisions a bold fantastic future with his professional trifecta of lean enterprises SolarCity, SpaceX, and Tesla.

Elon Musk envisions a bold fantastic future with his professional trifecta of lean startup enterprises SolarCity, SpaceX, and Tesla. Ashlee Vance (2015)

+See More