AI is a danger to the financial system, regulators warn for the first time

Top federal regulators are warning for the first time

that the use of artificial intelligence poses a risk to the financial system.

The Financial Stability Oversight Council, a team of leading regulators across the US government

formally classified AI on Thursday as an “emerging vulnerability.”

Sophisticated AI models have exploded in popularity in recent years

even as many prominent names within the field say the nascent technology could have disastrous effects if it grows out of control.

AI has the potential to spur innovation and drive efficiency

but its use in financial services requires thoughtful implementation

and supervision to manage potential risks,” FSOC warned in its annual report Thursday.

FSOC, created in the aftermath of the 2008 financial crisis and led by US Treasury Secretary Janet Yellen

cautioned that AI can “introduce certain risks,” including cybersecurity concerns, compliance risks and privacy issues.