Home / Business and Economy / AI Finance: Regulators Hold Key to Stability
AI Finance: Regulators Hold Key to Stability
26 Feb
Summary
- Regulators must understand AI and digital finance risks for stability.
- India's strategic patience in AI adoption offers a second-mover advantage.
- Sustained capital mobilization is crucial for India's developed economy goal.
Financial stability over the coming decade will largely depend on regulators' capacity to comprehend and oversee risks within digital and AI-enabled finance. Technology alone cannot foster robust financial markets; regulators, participants, and innovators must collaborate. India's measured adoption of AI is a strategic advantage, enabling it to learn from technological maturation and market trends before significant capital commitment.
This approach allows for selective AI integration, reaping productivity gains while mitigating exposure to valuation cycles. To achieve its goal of becoming a developed economy by 2047, India requires consistent mobilization of domestic and international capital. The focus must be on directing these funds towards productive investments that boost infrastructure, foster innovation, and create jobs.
As India's integration with global capital markets deepens, responsible management of capital mobility is paramount. Efficiency gains must be balanced with resilience against volatility. Investors are encouraged to partner with regulators on sandboxes, fostering resilience. Algorithmic trading and AI-driven strategies can rapidly transmit shocks, necessitating supervisory frameworks that detect herd behavior and operational vulnerabilities.
