The head of the Securities and Exchange Commission (SEC) warned that a financial crisis caused by artificial intelligence (AI) is “nearly unavoidable” in the next decade without further regulation of the rapidly advancing technology, The Hill reported. “It’s frankly a hard challenge,” SEC Chairman Gary Gensler told the Financial Times. “It’s a hard financial stability issue to address because most of our regulation is about individual institutions, individual banks, individual money market funds, individual brokers; it’s just in the nature of what we do.” “And this is about a horizontal [matter whereby] many institutions might be relying on the same underlying base model or underlying data aggregator,” he continued. Gensler predicted that a financial crisis could occur in the late 2020s or early 2030s, warning that multiple institutions basing their decisions on the same models could lead to herd mentality and undermine stability.
