“And we recommend building further inter-agency expertise to analyse and monitor potential systemic risks associated with the use of AI in the financial services sector while facilitating innovation,” Yellen said.

FSOC, which also includes the heads of the Federal Reserve and Securities and Exchange Commission, was set up after the 2008 financial crisis to deal with systemic risks.

It has previously flagged a number of risks that AI could introduce or amplify at financial institutions, including its ability to apply discriminatory bias in lending, especially for AI programs that operate as “black boxes,” making their output difficult to explain.

This will be the council’s last annual report…