(Bloomberg) -- Australia’s financial regulators are engaging with the industry to understand and monitor the adoption of artificial intelligence, the Reserve Bank said on Thursday.
The use of AI has brought economic benefits as banks have been using the tool for both back- and front-office operations to improve efficiency, but its widespread use brings risks, the RBA said in its semi-annual Financial Stability Review.
“How AI-related risks could interact with other risks and vulnerabilities in the global economy and financial system, including geopolitical risk, is largely unknown as there is limited relevant experience to draw on,” it said.
The RBA highlighted four types of risks in the context of AI:
- Operational risk from concentration of service providers
- Herd behavior could aggravate the transmission of shocks to the financial system
- Advances in AI and the emergence of GenAI has already led to an increase in credible misinformation and scam content such as deep fake images, videos or audio
- AI models are complex and opaque making it difficult to assess their reliability
The use of AI is already subject to laws and regulations in Australia, though more targeted initiatives may be needed should concerns arise that cannot be addressed by the current framework, the RBA said.
Australia’s government is considering introducing mandatory guardrails to promote the safe design, development and deployment of AI systems and the Council of Financial Regulators, which includes the RBA, is engaged in a range of initiatives to help with that, the review showed.
AI includes machine learning, which enables computer programs to learn from large datasets and natural language processing such as speech recognition. Generative AI is an emerging subfield within AI which can create new content such as text, images, voice, video and code in response to a prompt entered by a user.
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