AI could cause 'catastrophic' financial crisis, says Yuval Noah Harari

Nov 13, 2023 ·

In his latest book, "Artificial Intelligence: The Next Financial Crisis," Yuval Noah Harari examines the potential impact of artificial intelligence (AI) on the global financial crisis. He argues that AI has already begun to disrupt the banking industry and that the effects of this disruption could be far-reaching.

Harari points out that AI is changing the way banks do business. Banks are now relying on machine learning algorithms to make decisions faster and more accurately than before. This is causing a shift in how banks operate, as some decisions are no longer based on human judgement but rather on data analysis. This shift could have serious implications for the global economy.

Harari also stresses that AI could cause a new wave of financial crises. He believes that AI could create an environment where risk-taking is encouraged, leading to speculation bubbles and financial instability. In addition, he worries that AI could lead to “irrational exuberance” on the part of investors, resulting in large losses.

The author goes on to argue that AI will force governments to reevaluate their regulatory frameworks. He suggests that governments need to put in place proper safeguards to protect against the risks associated with AI. For example, regulators may need to issue new guidelines to limit speculation or require banks to conduct more detailed due diligence when making investment decisions.

Finally, Harari argues that if governments fail to act, the consequences of AI could be devastating. He warns that AI-driven financial instability could lead to recession, mass unemployment, and even civil unrest.

In conclusion, Yuval Noah Harari's book provides an important warning about the potential risks posed by AI. He argues that governments need to take steps to protect against these risks and calls for a stronger regulatory framework to protect the public from the potential effects of AI on the global economy.