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Use of AI in finance may need new rules, says ECB
FRANKFURT (Reuters) – The use of artificial intelligence in finance is still in its infancy but needs to be monitored and possibly regulated to avoid harm to consumers and ensure the proper functioning of markets, the European Central Bank said on Wednesday.
The ECB saw a number of opportunities in the use of generative AI by banks and other financial institutions, such as superior information processing, more efficient customer service and even a greater ability to detect cyber threats.
But it also warned of risks including herd behavior, over-reliance on a limited number of suppliers and more sophisticated cyber attacks.
“The implementation of AI across the financial system therefore needs to be closely monitored as the technology evolves,” the ECB said in a paper published as part of its regular Financial Stability Review.
“Furthermore, it may be necessary to consider regulatory initiatives if market failures become evident that cannot be addressed by the current prudential framework.”
The European Union has formulated the world’s first artificial intelligence rules, which will force general-purpose and high-risk AI systems to comply with specific transparency obligations and EU copyright laws.
So far, however, the ECB has said that the adoption of such systems by European financial firms was “in the early stages”.
“Market contacts indicate that euro area financial institutions may be slower to adopt generative AI, given the range of risks discussed previously (and) also considering potential reputational risks,” the ECB said.
(Reporting by Francesco Canepa; Editing by Muralikumar Anantharaman)