In a recent interview, renowned author Yuval Noah Harari expressed concerns about the potential of artificial intelligence (AI) to lead to a ‘catastrophic’ financial crisis, emphasizing the challenges of predicting the dangers associated with advanced technology.
Harari, the author of ‘Sapiens: A Brief History of Humankind’ and ‘Homo Deus: A Brief History of Tomorrow,’ discussed the intricate consequences of AI on the financial system in an interview with The Guardian. Earlier this year, he had advocated for the regulation of AI and underscored the importance of safety measures in its development.
The Israeli author highlighted the difficulty in safety testing AI models, stating that, unlike nuclear weapons, AI presents a myriad of potentially dangerous scenarios rather than a single, understood threat. He emphasized the need for regulation and safety measures, aligning with his previous stance on the subject.
Regarding the recent multilateral declaration on AI safety, Harari commended the collaboration of the UK, US, EU, China, and Australia, considering it a positive step. The declaration recognized AI as a potential catastrophic risk to humanity, marking the first international agreement on the matter.
Harari pointed out the unique nature of AI, which can make decisions, generate new ideas, and learn independently, making it particularly suited for data-driven sectors like finance. However, he expressed concern that AI, if left unchecked, could create complex financial tools beyond human comprehension, drawing parallels to the 2007–2008 financial crisis triggered by poorly understood instruments like collateralized debt obligations (CDOs).
The author warned of the potential for AI-developed financial crises to indirectly lead to wars or conflicts, describing it as a ‘catastrophic risk’ with economic, social, and political ramifications. While acknowledging that such a crisis might not be existential on its own, Harari stressed the importance of global cooperation in regulating AI.
This perspective echoes concerns raised by Gary Gensler, the chair of the US Securities and Exchange Commission, who highlighted the risk of a financial crisis in the next decade due to the increasing use of AI systems and concentration of power in a few platforms.
Harari has consistently emphasized the need for AI regulation and an ethical framework to address the challenges posed by the technology, asserting that current social and political systems are ill-equipped to handle these emerging issues.