The Federal Reserve is looking into the rise of artificial intelligence and machine learning, and is considering stepping up its oversight of these technologies used by financial institutions.
Federal Reserve Governor Lael Brainard spoke at the AI Academic Symposium virtual event on Tuesday, hosted by the Board of Governors of the Federal Reserve, saying it is important that the use of AI by the financial community is leading to equitable outcomes for consumers.
In prepared remarks for the event, Brainard said:
“Recognizing that AI presents promise and pitfalls, as a banking regulator, the Federal Reserve is committed to supporting banks’ efforts to develop and use AI responsibly to promote a safe, fair, and transparent financial services marketplace. As regulators, we are also exploring and understanding the use of AI and machine learning for supervisory purposes, and therefore, we too need to understand the different forms of explainability tools that are available and their implications.
“To ensure that society benefits from the application of AI to financial services, we must understand the potential benefits and risks, and make clear our expectations for how the risks can be managed effectively by banks. Regulators must provide appropriate expectations and adjust those expectations as the use of AI in financial services and our understanding of its potential and risks evolve,” Brainard said.
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The Fed is currently exploring whether it needs to increase its supervisory presence in order to ensure the responsible adoption of AI., Brainard said. For now, it will be soliciting information from many stakeholders including financial services firms, technology companies, consumer advocates, civil rights groups, merchants, other businesses and the public.
“The Federal Reserve has been working with the other banking agencies on a possible interagency request for information on the risk management of AI applications in financial serv