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Basel Chair: AI Regulation Should Be Coordinated Global Effort

AI, artificial intelligence

The head of the world’s banking watchdog is calling for greater oversight of artificial intelligence.

Pablo Hernández de Cos, chair of the Basel Committee on Banking Supervision, warned in an interview with the Financial Times (FT) posted Monday (Jan. 15) ] that artificial intelligence (AI) “could change the course of history, not necessarily for the good.”

De Cos spoke to the newspaper ahead of the upcoming World Economic Forum summit in Davos, and said world leaders should use the approach they took to regulating the financial sector and apply it to AI.

He also said that the Basel Committee is due to issue a report on the financial stability implications of AI in the months ahead.

“Financial stability is only one dimension, there are many other potentially more important consequences related to AI,” said de Cos, who is also governor of the Bank of Spain.

“Issues that if not properly managed could change the course of history not necessarily for the good. If we are not able to give a coordinated global response, the likelihood of getting the right solution to these challenges will be reduced.”

As PYMNTS wrote last week, the Davos meeting is kicking off with AI “occupying a split place on the agenda.”

“On one hand, AI was portrayed as a villain that could steal elections,” that report said. “On the other hand, attendees presented technology applications that could improve consumer-facing applications, such as banking.”

Gary Marcus, an AI expert and professor at New York University, echoed those election-related fears in comments to the FT.

“There are 70 elections around the world in 2024, deep fakes are getting better, and [AI] models can be used to create misinformation,” he said. “This is a vital issue.”

Elsewhere on the AI regulation front, the House Financial Services Committee last week formed a working group to examine the effect of AI on the financial services and housing industries.

The working group will investigate how technology impacts the development of new products and services, fraud prevention, compliance, supervisory and regulatory tools, as well as the financial services workforce.

“The Working Group will explore this technology’s potential, specifically its adoption in our financial system,” said Rep. Patrick McHenry (R-N.C.), who chairs the committee.

“It will also find ways to leverage artificial intelligence to foster a more inclusive financial system, while establishing the U.S. as the world leader in AI development and terms of use.”