Knowledge at Wharton The Regulatory Challenges of AI in Finance
Nov 25, 2024
Tobias Adrian, financial counselor and director at the IMF, discusses the fast-paced integration of AI into finance and the regulatory challenges it presents. He highlights the dual nature of AI, noting its potential for market efficiency versus the risks of explainability and accountability. The conversation emphasizes the need for global regulatory cooperation to address cross-border challenges and individual rights while balancing innovation with stability. Adrian advocates for ongoing dialogue to ensure AI benefits the financial sector safely.
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AI in Finance
- AI promises to change finance through opportunities, risks, and regulatory concerns.
- This includes algorithmic trading and generative AI's impact on trading and capital markets.
Generative AI's Impact
- Generative AI uses large models calibrated to extensive data, mimicking human intelligence.
- Its impact on trading and capital market activity is a focus of ongoing research.
Enhanced Market Efficiency
- Generative AI can improve market efficiency by quickly extracting information from complex reports.
- This enhances informational efficiency, as seen with SEC filings and monetary policy statements.