Shaktikanta Das On The Financial Havoc Rumours & Misinformation Can Wreak

RBI Governor Shaktikanta Das warns banks and financial institutions of the liquidity stress which can be caused by rumours and minisinformation. Addressing the topic of 'Central Banking at Crossroads' at the RBI@90 High-Level Conference organised by the Indian central bank, the RBI Governor said that while growing digitalisation of financial services has enhanced the efficiency of the financial sector across the globe, it has also brought several challenges which central banks have to deal with. "In the modern world with deep social media presence and vast access to online banking with money transfer happening in seconds, rumours and misinformation can spread very quickly and can cause liquidity stress. Banks have to remain alert in the social media space and also strengthen their liquidity buffers", he said. He also warned of risks from artificial intelligence (AI), saying heavy reliance on the technology could lead to financial stability risks. "Especially when a small number of tech providers dominate the market, this could amplify systemic risks, as failures or disruptions in these systems may cascade across the entire financial sector", the Governor said.