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Gary Gensler Speech to the National Press Club: “AI: The Most Transformative Technology of Our Time”

SEC Speech | Jul 18, 2023

Gary Gensler SEC - Gary Gensler Speech to the National Press Club:  "AI: The Most Transformative Technology of Our Time"

In his speech before the National Press Club on July 17, Gary Gensler, the Chair of the Securities and Exchange Commission, discusses the transformative power of artificial intelligence (AI) and its implications for various sectors, particularly finance. He also raises concerns about the explainability and fairness of AI models, as well as the potential risks to financial stability posed by the dominance of a small number of AI platforms.

Select Quotes

"AI, though, is much broader. I believe it’s the most transformative technology of our time, on par with the internet and mass production of automobiles."

    • Gensler discusses the significant impact of AI, comparing its transformative power to that of the internet and the mass production of automobiles. He highlights how AI has already been adopted in various sectors, including finance, where it's used for call centers, account openings, compliance programs, trading algorithms, sentiment analysis, and more.
    • He also mentions the rapid changes AI has brought to the field of robo-advisers and brokerage apps, emphasizing the breadth and depth of AI's influence.

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"AI models’ decisions and outcomes often are unexplainable... AI also may make it more difficult to ensure for fairness. The outcomes of its predictive algorithms may be based on data reflecting historical biases as well as latent features that may inadvertently be proxies for protected characteristics."

    • He raises concerns about the explainability and fairness of AI models. He points out that the complex, nonlinear, and dynamic nature of AI models can make their decisions difficult to interpret.
    • He also warns about the potential for AI to perpetuate historical biases and discrimination, as AI models may use data reflecting these biases or use latent features that act as proxies for protected characteristics.

"The possibility of one or even a small number of AI platforms dominating raises issues with regard to financial stability... AI may heighten financial fragility as it could promote herding with individual actors making similar decisions because they are getting the same signal from a base model or data aggregator."

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    • He suggests that this could lead to financial fragility due to herding behavior, where individual actors make similar decisions based on the same signals from a base model or data aggregator.
    • He also mentions the potential for AI to exacerbate the inherent network interconnectedness of the global financial system, which could pose additional risks to financial stability.

Read the full speech --> here


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