Author, philosopher, and history professor Yuval Noah Harari addressed an audience at the Bank for International Settlements (BIS) Innovation Summit, cautioning against the unbridled use of artificial intelligence (AI) in the financial sector and highlighting the need for robust institutions to oversee its deployment.
Harari emphasized the critical role of trust in the financial system, which facilitates cooperation among millions of individuals towards shared objectives. However, he expressed concern over the lack of efforts to make financial regulation accessible to the general populace, noting that only a fraction of people truly understand the intricacies of the financial system.
Reflecting on the financial crisis of 2007-2008, Harari attributed it to the proliferation of incomprehensible financial innovations that outpaced regulators' ability to understand and regulate them effectively. He warned that AI, as an evolving and alien intelligence, could further exacerbate this challenge by creating financial instruments beyond human comprehension, thereby shifting power dynamics away from regulators towards algorithms.
Harari underscored the importance of maintaining human understanding and regulatory oversight over AI to prevent it from becoming entirely inscrutable. He advocated for regulatory frameworks that prioritize transparency and comprehension, cautioning against reliance on individual geniuses or charismatic leaders for regulation.
While acknowledging the potential of AI to drive positive change, Harari cautioned against its unbridled deployment, drawing parallels with historical instances where world-changing innovations led to catastrophic consequences. He urged regulators to prioritize building trust between individuals to foster stability and humanity in the financial system of the future.
