AI will be at the center of future financial crises — and regulators are not going to be able to stay ahead of it. That’s the message being sent by SEC chair Gary Gensler, arguably the most important and powerful regulator in the U.S. at the moment.
Why it matters: A paper Gensler wrote in 2020, while a professor at MIT, is an invaluable resource for understanding those risks — and how little regulators can do to try to address them.
The big picture: The most obvious risk from AI in financial markets is that AI-powered “black box” trading algorithms run amok, and all end up selling the same thing at the same time, causing a market crash.