In the age of Artificial Intelligence (AI) and cryptocurrency, the reliability of the U.S. financial system resiliency is called into question: Here is what you need to know. 

RAND recently published a report investigating the vulnerability of the U.S. financial system as a result of the digital age including social media, the emergence of artificial intelligence, and the evolution of economic statecraft as a result of the fluctuating realities of geopolitics. Findings in the report include:

• Emerging threats to U.S. financial markets — such as attacks on AI-enabled financial models, bond dumping, deepfakes, and memetic engineering — pose a limited risk of significant economic damage because of the high costs of such attacks to adversaries and existing market safeguards.
• Risks may increase because of geopolitical tensions and advancing technological capabilities that alter adversaries’ cost-benefit calculations.
• The most significant threat is not an abrupt event, akin to a “financial 9/11,” but rather a slow and steady process, akin to “financial climate change.” This phenomenon could occur when disinformation or misinformation diminishes public trust in markets, consequently complicating the distinction between reality and fabrication and thereby escalating market volatility.
• Data privacy regulations could limit the threat posed by AI-augmented disinformation campaigns. Regulations would make it harder for malicious actors to collect detailed data that could be used to create and disseminate highly customized messages to influence individual behavior.

The report underscores how the compounded evolution of technological changes in the financial sector engenders a greater possibility for potential threats to undermine its resilience and stability. 

The recommendations within the report suggest implementing preventative measures before financial incidents happen in an effort to mitigate losses. One issue that poses the largest threat is the employment of AI by threat actors to execute a financial attack, to mitigate this threat the report suggests implementing AI and other technological safeguards for responsible development to curb technological threats in the financial sector. 

In addition to regulatory policy measures, recommendations from the report also include implementing economic policies that serve to incentivize competition through AI to boost the resiliency of the U.S. financial system.

In order to maintain readiness capabilities, the report recommends implementing regular wargame exercises that simulate financial crises to identify potential areas of operational weakness and serve to develop risk mitigation techniques to inhibit loss potential. 

Lastly, the report recommends holding frequent summits between financial stakeholders, field experts in technology and geopolitics, as well as national security to host conversations on understanding the nexus of evolving technology and its greater impacts within both in national security and the financial sector.

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