Janet Yellen is worried about AI’s potential threat to U.S. financial stability and says federal watchdogs should make averting danger a top priority

US regulators, including Treasury Secretary Janet Yellen, are increasingly concerned about the potential risks posed by artificial intelligence (AI) to financial stability. President Joe Biden signed an executive order in October to establish standards for security and privacy protections for AI, signaling a shift towards necessary regulation. The Financial Stability Oversight Council (FSOC) has identified AI in financial services as a vulnerability and highlighted risks such as discriminatory bias in lending and the difficulty of explaining the output of AI programs. The report also mentioned concerns around high interest rates, climate change, cyber threats, and leverage, emphasizing the need for regulatory vigilance.