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Robert Fay is the director of the Global Economy Program at the Centre for International Governance Innovation, and previously held several senior roles at the Bank of Canada, most recently as senior director overseeing work to assess developments and implications arising from the digitization of the Canadian economy.

The reach and implications of big data and artificial intelligence are global. Their governing frameworks, though, are not. In fact, they scarcely exist.

Some initiatives are under way. Both the Group of Seven and the Group of 20 have flicked at data or digital strategies on their 2019 agendas, and Canada recently announced a digital charter. But there is certainly no comprehensive global discussion.

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Clearly, this is a massive oversight – and it’s not even the first time the world has faced such a situation.

The rapid growth of the technology sector and its appetite for data is reminiscent of the financial services boom in the 1990s and 2000s. Fuelled by light-touch regulation – and, in no small measure, hubris – banks grew tremendously in size, power and interconnectedness, leading to the creation of some exceptionally large global banks.

In many instances, this expansion was encouraged, or at least not discouraged, because creating and delivering new financial services to more customers with greater efficiency was seen as a global good. And the leading view at the time was that self-interest and pride of reputation would constrain bad behaviour, even as financial wizardry obscured the network effects, risks and consequences.

Instead, the global financial crisis began. People, corporations and the financial system as a whole faced significant negative and long-lasting consequences, including plummeting trust in institutions.

Compare that scenario to the current data and AI governance gap. A light-touch approach to regulation means that few countries have data or digital strategies in place, and none have a coherent overarching framework. Before the financial crisis, a few global banks dominated financial services; today, a handful of technology giants dominate data flows, and their operations are as opaque as the banks’ were.

The negative impact of the financial crisis would pale in comparison to that from the misuse of big data and AI. These technologies permeate every aspect of our lives, and that will only accelerate in ways we cannot yet envision. The interconnectedness of the Internet of Things, 5G and digital identities would only exacerbate the huge systemic risk.

A crisis in the system could have profoundly damaging outcomes: cyber warfare, state surveillance, privacy invasion, data breaches, large economic and personal-income losses, and a global loss of trust. These risks are exacerbated by an East-West geopolitical divide: the United States and China are competing head-to-head for supremacy in the data realm, and everyone else is caught in the middle.

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That’s an ominous picture, but the future needn’t be so bleak. Policy makers have the opportunity to draw from the lessons of the financial crisis and to act before the system crumbles.

After the 2008 crisis, for example, G20 leaders established the Financial Stability Board to promote the reform of international financial regulation and supervision. Its innovative multi-stakeholder processes could be adapted for the data crisis. The new digital stability board would take its mandate from global leaders and coordinate work on global principles and standards for the big data and AI realm, while working with domestic agencies responsible for data and AI policy to best reflect national values and customs.

Like the Financial Stability Board, this institution would monitor and advise on best practices, assess vulnerabilities, and consider regulatory and policy actions needed to address them in a timely manner. It would liaise with other institutions such as the Organisation for Economic Co-operation and Development and the World Trade Organization to ensure that any framework feeds into the development and modernization of existing policies.

Around the world, there seems to be increasing recognition of the key roles that data and AI play in the global economy. The “Data Free Flow with Trust” model is even one of Japan’s key priorities for its G20 presidency. But existing multilateral bodies have their hands full, and they do not have the necessary expertise to lead on data governance or a digital future. A global framework requires the formation of an entirely new institution to signal the importance of setting global standards and policies for big data and AI.

The ambition is large. But if the data governance gap we face today truly does mirror the governance gap that led to the 2008 financial crisis, it is essential that countries work together to address it. The creation of a new institution would be the Bretton Woods moment for the 21st century, 75 years later: an international agreement to reform the digital order.

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