What's new
Overview
This deep dive examines the latest developments in artificial intelligence, including emerging adoption patterns, key risk watch points, evolving policy and supervisory guidance, and research on the economic impact of AI.
What's new
Federal Reserve Board Governor Cook says rates should stay steady and flags AI-driven inflation and stability risks
Federal Reserve Governor Lisa D. Cook said elevated risks to inflation and employment argue for holding rates steady, noting risks still tilt toward higher inflation and she is prepared to raise rates if disinflation stalls or ease if the labor market weakens. She said artificial intelligence (AI) investment could add to price pressures and labor-market churn even as it boosts productivity in financial services, and warned AI may amplify financial stability risks. Cook outlined how the Fed is using AI in financial-stability analysis, including new technology-risk teams, smaller AI models, and systemwide agentic AI experiments.
Dutch Central Bank identifies cyber and operational risks from AI and geopolitics as major threats while banks remain resilient in war stress test
De Nederlandsche Bank’s semiannual Financial Stability Overview flags cyber and operational risks, driven by rapid advances in artificial intelligence and heightened geopolitical tensions, as a major threat to financial stability, with geo-economic fragmentation and prolonged higher energy prices remaining key risk drivers. Stress tests indicate Dutch banks can absorb losses from a Middle East conflict escalation within existing capital buffers, while the bank also highlights rising private credit exposures of large insurers and rapid global stablecoin market growth as emerging vulnerabilities.
Oman Financial Services Authority identifies three critical vulnerabilities in OpenClaw autonomous AI agents system
The Oman Financial Services Authority identified and reported three critical vulnerabilities in the OpenClaw autonomous AI agents system. The flaws were validated and published as CVE-2026-44109, CVE-2026-43527 and CVE-2026-43582, with the authority warning they could be exploited to compromise systems and enable unauthorized actions.
South Korea Financial Services Commission launches phased easing of network separation rules for AI cybersecurity at 49 large financial companies
South Korea’s Financial Services Commission announced measures to address cyber risks from advanced AI in finance, centred on phased easing of network separation rules so eligible firms can use AI and SaaS cybersecurity tools. It will grant one-year relief via no action letters to large institutions that pass expert screening, require vulnerability test reporting, and may fully lift network separation through the regulatory sandbox. The commission will also issue AI cybersecurity guidelines in June 2026.
International Organization of Securities Commissions publishes AI supervisory toolkit for capital markets supervisors and opens industry survey to 26 June
The International Organization of Securities Commissions has published a non-binding Supervisory Toolkit for AI Use in Capital Markets to guide securities regulators in risk-based oversight of AI systems across their lifecycle, including traditional machine learning, generative AI and agentic AI. The toolkit identifies key AI risk areas, sets out supervisory tools for governance, third-party risk, disclosure and recordkeeping, and provides indicators and engagement methods for monitoring AI adoption. IOSCO will next review emerging industry practices in AI governance, disclosure and recordkeeping and will continue coordinating on AI developments with other international bodies, including the Financial Stability Board.
Japan Financial Services Agency requests short-term Frontier AI measures from financial institutions and outlines May 25 Business Financing Promotion Act rollout
The Japan Financial Services Agency outlined short-term expectations for supervised financial institutions to address evolving Frontier AI-related vulnerabilities, including treating AI risk as a management issue and strengthening systems for rapid security patch releases. It also highlighted the start of the Business Financing Promotion Act, which aims to shift lending toward future business potential, establish a headquarters to promote business-oriented lending, and support financing for startups, business succession and revitalization, with 20 institutions reporting 26 initiatives using corporate value collateral.
South Korea Ministry of Economy and Finance discusses Korea EBRD AI Hub follow-up and seeks stronger Korean role in EBRD projects
South Korea’s Ministry of Economy and Finance said Second Vice Minister Huh Jang met European Bank for Reconstruction and Development First Vice President Greg Guyett to discuss follow-up on establishing a Korea-EBRD artificial intelligence hub and to call for close coordination to accelerate its launch. Huh also sought EBRD support for greater Korean participation in power infrastructure investments, expanded Korean staffing, and broader cooperation under South Korea’s global AI hub plan with other multilateral development banks.
Japan Financial Services Agency and Bank of Japan request short term responses by financial institutions to frontier AI threats
The Japan Financial Services Agency and the Bank of Japan have requested financial institutions and related entities to take short-term measures in response to threats posed by frontier artificial intelligence. The authorities are seeking immediate risk-mitigation actions from the sector.
South Korea's Ministry of Economy and Finance advances AI Hub cooperation with Inter-American Development Bank to support Korean firms in Latin America
South Korea’s Ministry of Economy and Finance and the Inter-American Development Bank held their annual consultation on bilateral cooperation, focusing on operationalising the new AI Hub and broader support for Korean firms entering Latin America. They highlighted complementary demand and capabilities in artificial intelligence, digital and energy sectors, discussed deeper cooperation on AI projects, trust funds, co-financing, private investment and critical minerals, and agreed to work toward the Korea-Latin America Business Forum in Buenos Aires to advance Korean AI companies’ regional expansion.
European Central Bank publishes research linking AI architecture to different financial stability risks
The European Central Bank published research analysing how different AI architectures may affect financial stability using a stylised mutual fund redemption game. Q-learning systems tend to coordinate on bank run-like mass redemptions due to a “hot stove” effect, while large language models generate more heterogeneous, less predictable decisions. Noisy private signals align beliefs but do not materially alter Q-learning behaviour. The authors highlight implications for investor protection, firms’ risk management and market design, and stress that the views expressed do not necessarily represent the ECB, Deutsche Bundesbank or the Eurosystem.
The Pensions Regulator publishes AI plan setting governance expectations for trustees and scheme managers
The Pensions Regulator has published an artificial intelligence plan setting expectations for how pension trustees and scheme managers should govern AI use, emphasising that accountability for outcomes remains with them even where activities are delegated or AI-supported. Pending fuller guidance, schemes should establish clear AI governance, test and monitor systems, review risks and controls, strengthen data and data protection, and protect members from AI-enabled fraud, while TPR aligns with the Financial Conduct Authority and expands its own AI use.
Monetary Authority of Singapore launches Young Talent Programme for AI in Finance and expands pathways into financial sector jobs
The Monetary Authority of Singapore launched a Young Talent Programme for AI in Finance and broader measures to strengthen education-to-work pathways in the financial sector, focusing on structured industry exposure and AI skills development. The pilot, developed with Singapore Management University and Nanyang Technological University and involving around 20 financial institutions, will offer applied AI projects, mentoring and credit-bearing curricula, while MAS and the Institute of Banking and Finance work with industry to expand work-study pathways and over 1,000 graduate internship and traineeship positions.
Sweden's Riksbank says AI has not yet affected current monetary policy and flags tougher labour market entry for young workers
The Riksbank published a speech by First Deputy Governor Aino Bunge on how artificial intelligence could affect the labour market, macroeconomy and monetary policy, concluding that AI has not yet materially influenced productivity or policy but warrants close monitoring. Bunge highlighted a “no hire, no fire” pattern in AI‑exposed jobs and noted that firms’ AI use is widespread but operational effects remain limited. She also said the war in the Middle East has raised energy and fertiliser prices and will lift inflation relative to baseline, but argued against a pre‑emptive monetary policy response given low inflation and the credibility of the inflation target.
United Kingdom's Financial Conduct Authority, Bank of England and HM Treasury reinforce cyber resilience steps for firms facing frontier AI threats
The Financial Conduct Authority, Bank of England and HM Treasury issued a joint statement warning that frontier artificial intelligence models materially increase cyber risk for regulated firms and financial market infrastructures, reiterating that firms must address these risks under existing operational resilience requirements. The authorities highlight expectations around governance, vulnerability management, third-party risk, protection, and response and recovery, and direct firms to cyber resilience practices and guidance from the Cross Market Operational Resilience Group and the National Cyber Security Centre.
U.S. House Committee on Financial Services advances six bills including a proposal to replace the Federal Reserve dual mandate with price stability only
The U.S. House Committee on Financial Services has reported six bills to the House of Representatives, including the Price Stability Act of 2025, which would replace the Federal Reserve’s dual mandate with a single mandate focused on price stability. The other bills would enhance protections against fraud affecting retirees, require joint federal assessment of artificial intelligence risks in financial crime, establish AI innovation labs and regulatory sandboxes, and direct regulators to upgrade supervisory technology and fraud-fighting tools, including for community banks and credit unions.
U.S. House Financial Services Committee marks up bills on AI safeguards fraud tools and Federal Reserve price stability
The U.S. House Financial Services Committee released Chairman French Hill’s remarks on a legislative package to expand the federal response to AI-enabled financial fraud, promote regulatory sandboxes for financial technology, strengthen anti-scam enforcement, and assess regulators’ technology gaps. The bills, including the AI Plan Act, Unleashing AI Innovation in Financial Services Act, Bank Fraud Technology Advancement Act, GUARD Act, FUTURES Act, and Price Stability Act of 2025, are framed as part of the committee’s agenda on financial innovation, consumer protection, and refocusing the Federal Reserve.
Bank of Canada says Canadian business AI adoption has risen to around 12% and limited productivity gains are in projections
The Bank of Canada’s External Deputy Governor Michelle Alexopoulos said the Bank views artificial intelligence as a potential driver of structural change in productivity, growth, employment, inflation and financial stability, and is beginning to incorporate AI-related productivity gains into its projections of potential output. She highlighted rapid but uneven AI adoption in Canada, with most firms using AI to automate routine tasks and support analysis rather than replace workers, and noted that the Bank uses AI and machine learning for forecasting, text and sentiment analysis, and financial stability monitoring while keeping monetary policy decisions under human control.
Uzbekistan Ministry of Economy and Finance completes four priority digital projects and launches AI pilots
The Ministry of Economy and Finance of Uzbekistan reported progress on digitisation and artificial intelligence, including four priority digital projects, an AI working group, AI-based support tools, and a business process audit and redesign initiative. The projects cover subsidy administration, higher education workforce planning, supervisory board governance and open budget processes, while AI pilots include an assistant on the Open Budget portal, a G'azna chatbot module in the UzASBO suite and the IM AI analytical system for regional macroeconomic and enterprise-level analysis.
Brunei Darussalam Ministry of Finance and Economy opens two day accounting forum and urges greater use of data and AI
The Revenue Division of the Brunei Darussalam Ministry of Finance and Economy and the Brunei Darussalam Institute of Certified Public Accountants opened a two-day Accounting Forum and Exhibition on “Redefining the Profession Shaping the Future of Accounting in Brunei Darussalam.” In his keynote, the Minister at the Prime Minister’s Office and Minister of Finance and Economy II stressed the profession’s role in financial integrity, transparency, accountability and sustainable growth, and urged greater use of data and artificial intelligence in decision-making, risk mitigation and forecasting.
Japan Financial Services Agency publishes minister remarks confirming foreign exchange coordination with the United States and a planned finance sector AI cyber working group
The Japan Financial Services Agency reported that Finance Minister Katayama reaffirmed close coordination with the United States on financial market developments, including foreign exchange, in line with the Japan-US finance ministers' joint statement. He announced a new public-private working group involving the financial industry, IT firms, the government and the Bank of Japan to strengthen financial sector cybersecurity against advanced AI-related threats and develop a shared view of associated risks and responses.
State Bank of Vietnam outlines responsible AI approach and calls for ecosystem-wide safeguards for digital financial trust
The State Bank of Vietnam’s Deputy Governor Pham Tien Dung outlined the central bank’s approach to artificial intelligence in banking, stressing that digital innovation must be matched by safety, risk control and customer protection, and that AI must not dilute human and institutional accountability for financial decisions. He highlighted the rapid expansion of digital banking and payments, the State Bank’s efforts to strengthen legal and security frameworks, biometric authentication and data cleansing with the Ministry of Public Security, and the requirement for credit institutions to upgrade technology, information security and risk management. Dung also underscored AI’s benefits in credit scoring, fraud detection and anti-money laundering, and the associated risks, calling for shared risk alerts, coordinated handling of suspicious accounts and strict compliance with personal data protection and cybersecurity rules.
South African Reserve Bank outlines AI supervision agenda with joint discussion paper expected in early second half of 2026
The South African Reserve Bank’s Prudential Authority outlined a three-part AI supervisory agenda for the financial sector focused on improving information, building skills and calibrating regulation. A joint Prudential Authority–Financial Sector Conduct Authority discussion paper on AI regulation is expected in early H2 2026, with regulatory arrangements likely by early 2027. The speech highlighted AI as a growing prudential and conduct issue, citing vulnerabilities such as third-party dependencies, cyber and model risks, and prioritising AI taxonomies, governance, explainability and disclosure. It noted gaps in skills, fairness testing and board oversight. In parallel, the Intergovernmental Fintech Working Group is developing an AI workstream with sandbox testing for complex use cases including algorithmic credit scoring, index insurance and tokenised assets.
Australian Securities & Investments Commission warns licensees and market participants to urgently strengthen cyber resilience as frontier AI raises cyber risk
The Australian Securities & Investments Commission has issued an open letter urging all licensees and market participants to strengthen cyber resilience as frontier AI increases the speed, scale and sophistication of cyber threats. ASIC reiterates that cyber resilience is a core licensing obligation requiring board and executive leadership, references its recent court outcome against FIIG Securities Limited, and sets expectations for effective, proportionate cyber risk controls and governance. The letter must be tabled at boards and risk governance committees and directs firms to Australian Government guidance as ASIC coordinates with other regulators to promote consistent expectations.
Office of the Comptroller of the Currency flags commercial real estate refinancing cyber and sanctions risks in Spring 2026 risk outlook
The Office of the Comptroller of the Currency’s Spring 2026 Semiannual Risk Perspective reports that the federal banking system entered 2026 with improved earnings, strong balance sheets, high capital and liquidity, and manageable credit risk. The report highlights credit and refinancing risks in segments of commercial real estate and private credit, modest increases in past-due consumer loans, and elevated operational and compliance risks from sophisticated cyber threats, fraud, advanced artificial intelligence tools, and heightened sanctions and anti-money laundering pressures.
International Monetary Fund analysis warns AI-enabled cyberattacks could trigger systemic financial stress
The International Monetary Fund warns that advances in artificial intelligence are increasing the scale and speed of cyberattacks on the financial system and could turn extreme cyber incidents into macro-financial shocks. It urges supervisors to treat cybersecurity as a core financial stability issue by strengthening resilience standards, oversight of systemic transmission channels, and public-private coordination, while noting that AI can also enhance cyber defenses if supported by appropriate investment, governance, oversight and cooperation.