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Central Banks/financial regulators to validate AI/ML software used in finance?

Summary:
All kinds of things happening and are going to happen in world of tech and finance. In this Bank of England paper, group of researchers write on why there will be a need to validate AI/ML software used in finance: The use of machine learning and artificial intelligence (AI) in finance poses growing risks for software validation to financial institutions, markets, and decision makers, making it a key priority for regulators. This paper discusses accepted software validation practices; highlights challenges to those practices introduced by AI; and suggests areas of focus for developers when creating AI-based solutions for the finance industry. We discuss how practices may need to evolve to respond to these new challenges. Our objective is to inform policymakers and governance bodies,

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All kinds of things happening and are going to happen in world of tech and finance.

In this Bank of England paper, group of researchers write on why there will be a need to validate AI/ML software used in finance:

The use of machine learning and artificial intelligence (AI) in finance poses growing risks for software validation to financial institutions, markets, and decision makers, making it a key priority for regulators. This paper discusses accepted software validation practices; highlights challenges to those practices introduced by AI; and suggests areas of focus for developers when creating AI-based solutions for the finance industry. We discuss how practices may need to evolve to respond to these new challenges. Our objective is to inform policymakers and governance bodies, and to raise awareness among decision makers in financial institutions. We do not make policy recommendations at this stage.

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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