financial innovation

The bestselling author, philosopher and historian sees grim potential for AI to get out of control in the financial system.

The unbridled use of artificial intelligence in the financial system could lead to dire results, author, philosopher and history professor Yuval Noah Harari told an audience at the Bank for International Settlements (BIS) Innovation Summit. Strong institutions are needed to keep AI in check, he said.

The financial system creates trust, Harari argued. Money, bonds and other financial devices allow millions of strangers to work together toward common goals. But no effort has been made to make financial regulation understandable “to humans,” he said:

Harari cited the financial crisis of 2007-2008 as an outcome of incomprehensible financial innovation. Regulators were unable to understand new financial products well enough to regulate them.

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