Author, philosopher, and history professor Yuval Noah Harari warned at the Bank for International Settlements (BIS) Innovation Summit that the unrestricted utilization of artificial intelligence (AI) in the financial sector could have severe consequences. Harari emphasized the importance of strong institutions in order to effectively control AI.
According to Harari, the financial system is built on trust, with money, bonds, and other financial instruments enabling strangers to collaborate towards common objectives. However, there has been no effort made to make financial regulation comprehensible to humans, resulting in the 2007-2008 financial crisis where regulators struggled to regulate unfamiliar financial products.
Harari described AI as an alien form of intelligence that is still in its early stages of development. It does not reason like humans and has the potential to create financial instruments that surpass human imagination. This could shift power from politicians and regulators to algorithms, with trust relationships being established between AI systems instead of people. In the event of a financial crisis, politicians and regulators would be compelled to rely on AI.
This disruption in trust relationships could lead to social instability, as trust in politicians and institutions is already on the decline. Harari emphasized that regulation should not be entrusted solely to geniuses or charismatic leaders, but rather to institutions that can keep humans involved in the decision-making process.
However, even with institutions in place, there are still dangers. Groundbreaking innovations often succeed only after several failed attempts. Harari highlighted imperialism, communism, and Nazism as examples of failed attempts to construct industrialized societies, resulting in millions of victims. Meanwhile, AI has the capability to generate ideas on how to utilize itself.
Harari urged regulators to focus on building trust among people to ensure a stable and human-friendly future financial system.
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