OCC’s Michael Hsu encourages banks to apply guardrails to AI use

Warning of an “eventual reckoning” on synthetic intelligence (AI) use by monetary establishments, the appearing head of the Workplace of the Comptroller of the Forex (OCC) mentioned the business ought to be taught classes on how related disruptive applied sciences like derivatives and cryptocurrency advanced from being useful to harmful.

In a speech delivered Thursday at a Monetary Stability Oversight Council (FSOC) convention, Michael Hsu mentioned the dangers posed by AI use by monetary establishments may lead to unhealthy outcomes, related to when derivatives and monetary engineering contributed to the 2008 monetary disaster or cryptocurrencies’ crashing values through the “crypto winter” of 2022.

“If the previous is any information, the micro- and macro-prudential dangers from such makes use of will emanate from overly fast adoption with insufficiently developed controls,” he mentioned. “What begins off as accountable innovation can rapidly snowball right into a hypercompetitive race to develop revenues and market share, with a ‘we’ll take care of it later’ perspective towards danger administration and controls.”