The Reserve Bank has issued a warning about the potential risks associated with Artificial Intelligence (AI) in financial markets. According to the bank, AI could worsen market crashes and increase the likelihood of fraud.
The bank's concerns center around AI's ability to amplify market movements and create new risks. For instance, AI-driven trading systems can rapidly execute trades, potentially exacerbating market volatility. Additionally, AI's capacity to analyze vast amounts of data could be exploited for fraudulent activities.
The Reserve Bank's warning highlights the need for financial institutions to carefully consider the risks and benefits of AI adoption. As AI technology continues to evolve, regulators and financial institutions must work together to develop effective risk management strategies and ensure that AI is used responsibly in financial markets.
