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    Navigating the Dual Edges of AI in Finance: Balancing Efficiency with Emerging Risks

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    The Financial Stability Board (FSB) believes artificial intelligence (AI) could provide benefits in finance such as operational efficiency and personalized products, but also heightened risks such as increased dependence on third-party services, cyber threats, and data management issues. Furthermore, AI could also aid in the perpetration of financial fraud, such as the rising trend of deepfake scams in cryptocurrencies. The FSB suggests information gaps need to be filled in AI tracking, regulators should cooperate more with the private sector and current regulations should be reviewed to cope with AI’s local and global challenges.

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    The Financial Stability Board (FSB), a global watchdog for the financial system, recently made some points about artificial intelligence (AI) in the world of finance. They reckon AI could be really helpful in lots of ways, from making things run smoother to tailoring products for individual customers. But, it’s not all good news – they also think AI could expose weaknesses in the financial sector.

    They suggest that AI could possibly heighten risks around things like dependence on third-party services, cyber threats, and data management. There’s also a worry that people with dodgy intentions could use AI tech to commit fraud. In fact, back in September, a report highlighted a rise in AI deepfake scams in the crypto world. These scams are likely to get more sophisticated, so it’s something we should definitely watch out for.

    The FSB has offered up some suggestions on how to manage these risks. They think we need to fill info gaps when it comes to tracking AI in finance. They also reckon it would be a good idea for regulators to work more closely with the private sector – people like service providers, developers, and academics. Plus, they think it’s important to review current rules to make sure they’re up to the task of managing local and global challenges. This means thinking about how we can improve the way we regulate and oversee policies around AI in the finance game.

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