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
Croatian Financial Services Supervisory Agency highlights senior management accountability for AI operational risk at Malta conference
The Croatian Financial Services Supervisory Agency's President, Ante Žigman, emphasized at a Malta conference that AI does not alter firms' business responsibilities and should be managed as a new operational risk. He highlighted the importance of senior management addressing AI-related risks and aligning with the European Union Artificial Intelligence Act's control rules. Žigman also stressed the need for defined procedures and enhanced monitoring of AI within firms' risk management frameworks.
Bank for International Settlements working paper links robot adoption’s job impact to initial robotisation and ICT investment
The Bank for International Settlements released a working paper examining the impact of robot adoption and ICT investment on employment across 20 EU countries from 1995 to 2020. The study finds automation's effects are context-dependent, with employment growth varying based on initial robot use and ICT investment levels. In sectors without initial robot use, increased robot adoption and ICT investment boost employment, while in sectors with existing robots, high robot and ICT investment may lead to weaker employment growth.
Hong Kong Monetary Authority and three regulators launch GenAI Sandbox++ to extend supervised generative AI pilots across financial services
The Hong Kong Monetary Authority, with other regulatory bodies and Hong Kong Cyberport Management Company Limited, launched the Generative Artificial Intelligence Sandbox++ initiative. This program aids financial institutions in developing generative AI use cases with supervisory guidance and technical support, including GPU computing resources. It focuses on risk management, anti-fraud, and customer experience, promoting AI-driven solutions like insurance underwriting and fraud detection systems.
International Monetary Fund Managing Director urges Asia to harness AI manage ageing pressures and deepen regional trade integration
IMF Managing Director Kristalina Georgieva outlined policy priorities for Asia at the Asia in 2050 Conference, emphasizing productivity growth through AI, labor market management, and trade-led growth via regional integration. She highlighted potential GDP growth from AI and demographic challenges posed by automation, with IMF research suggesting significant economic impacts. The IMF plans to focus on digital finance innovations at the upcoming Annual Meetings in Bangkok.
Japan Financial Services Agency publishes AI Discussion Paper version 1.1 on AI use in financial institutions and seeks stakeholder feedback
The Japan Financial Services Agency (FSA) released version 1.1 of its AI Discussion Paper, detailing the current use of artificial intelligence in financial institutions and initial issues for sound utilization. This update, building on the March 2025 version, includes insights from the FSA’s AI Public-Private Forum and highlights areas needing regulatory clarification. The FSA emphasizes that the analysis is preliminary and may change with technological and business developments.
Bank of Italy publishes its 2026-2028 Strategic Plan focused on responsible AI, the digital euro and stronger oversight of fintech risks
The Bank of Italy released its Strategic Plan for 2026-2028, focusing on adapting to geopolitical tensions, economic fragmentation, and technological change. Key priorities include enhancing human capital, responsibly adopting artificial intelligence, and reinforcing digital services. The plan also emphasizes strengthening prudential supervision, anti-money-laundering oversight, and cyber resilience.
European Securities and Markets Authority publishes supervisory briefing to harmonise oversight of algorithmic trading under MiFID II
The European Securities and Markets Authority (ESMA) issued a supervisory briefing to harmonize algorithmic trading supervision under MiFID II across the EU. It provides National Competent Authorities with tools and expectations for supervising firms, addressing pre-trade controls, governance, testing frameworks, and AI-related risks. As a nonbinding tool, it complements existing requirements and may be updated as market and technological developments evolve.
Central Bank of the UAE partners with Core42 to build a sovereign financial cloud services infrastructure
The Central Bank of the UAE has partnered with Core42 to develop the Sovereign Financial Cloud Services Infrastructure, the first dedicated financial cloud ecosystem. Part of the Financial Infrastructure Transformation programme, it aims to enhance data sovereignty, cybersecurity, and operational agility for the UAE financial sector. The platform will incorporate AI and advanced analytics for intelligent automation and real-time data analysis, offering a unified framework for managing multi-cloud services.
Malta Financial Services Authority publishes 2026 supervisory priorities centred on financial crime compliance, consumer protection and cross-border supervision
The Malta Financial Services Authority's 2026 Supervisory Priorities emphasize financial crime compliance, consumer protection, and cross-border supervision. Key areas include alignment with the EU anti-money laundering package, enhanced consumer protection, and oversight of digital finance transitions under the Markets in Crypto-Assets Regulation. The MFSA stresses governance and internal controls in AI adoption and urges entities to review these priorities at the board level.
Federal Reserve Board Governor Cook outlines how AI could lift productivity while reshaping labor markets and the neutral rate
Federal Reserve Board Governor Lisa D. Cook discussed AI's impact on productivity, employment, and monetary policy, expressing cautious optimism about long-term growth but warning of job displacement. Cook noted the Federal Reserve's limited AI use and highlighted labor-market changes, including weaker demand in some occupations and higher unemployment among recent graduates. She also addressed monetary policy concerns, such as AI-driven investment's implications on the neutral rate and potential inflation pressures.
European Central Bank Banking Supervision outlines expectations for AI governance in banks and signals more targeted monitoring of generative AI
The European Central Bank Banking Supervision assessed banks' increasing use of AI and related governance and risk management expectations. Over 85% of large banks under European supervision use AI, with significant growth in generative AI across operations. The ECB highlighted challenges in AI governance, risk management, and dependency on third-party providers, planning to focus on generative AI applications and monitor developments under the EU Artificial Intelligence Act.
European Central Bank sets supervisory expectations for banks’ AI governance and signals more targeted scrutiny of generative AI
In a keynote speech, ECB Banking Supervision emphasized its focus on banks' increasing use of artificial intelligence, particularly generative AI, due to dependencies on third-party providers and cloud infrastructure. The ECB highlighted uneven governance practices and stressed the need for senior management oversight and alignment with European Banking Authority principles. Looking ahead, the ECB plans to intensify monitoring of AI, focusing on generative AI applications, under its 2026-28 supervisory priorities on operational resilience and ICT capabilities.
Bank for International Settlements maps global AI giants and finds growing concentration and vertical integration across the AI supply chain
The Bank for International Settlements' BIS Bulletin No 122 examines the macroeconomic significance of "AI giants" in the AI supply chain, concentrated in the U.S., China, Chinese Taipei, Korea, and the Netherlands. It notes U.S. and Chinese firms dominate multiple supply chain layers, while others like TSMC and ASML focus on specific inputs. It discusses vertical integration, jurisdictional AI strategies, and suggests policy measures for fair access, competition, and oversight.
Central Bank of the United Arab Emirates issues guidance note on consumer protection and responsible AI use by licensed financial institutions
The Central Bank of the United Arab Emirates has issued a guidance note on consumer protection and the responsible use of artificial intelligence and machine learning by licensed financial institutions. The note outlines principles for governance, fairness, transparency, human oversight, and data privacy, aligning with the UAE's national AI strategy. It aims to balance technological advancement with consumer protection and financial stability.
U.S. Department of the Treasury releases an AI Lexicon and Financial Services AI Risk Management Framework
The U.S. Department of the Treasury released an Artificial Intelligence Lexicon and the Financial Services AI Risk Management Framework to guide AI use in the financial sector, supporting the President’s AI Action Plan. The Lexicon standardizes AI terminology, while the Framework adapts the National Institute of Standards and Technology’s AI Risk Management Framework for financial services. These resources are part of broader efforts by the Artificial Intelligence Executive Oversight Group to address AI-related issues like identity, fraud, and data practices.
International Monetary Fund Managing Director outlines AI’s potential 0.8 percentage point GDP lift and net job gains at India summit
IMF Managing Director Kristalina Georgieva, at the India AI Impact Summit, highlighted AI's potential to boost global GDP growth by up to 0.8 percentage points and create a net addition of 1.3 jobs for every AI-related hire. She emphasized the risks of job displacement and the importance of a human-centred AI approach. Georgieva also encouraged India to share its practical AI advancements with low-income and developing countries.
U.S. Department of the Treasury concludes AI cybersecurity initiative and will release six risk management resources for financial services
The U.S. Department of the Treasury concluded a public-private initiative to enhance cybersecurity and risk management for artificial intelligence in the financial sector. Led by the Artificial Intelligence Executive Oversight Group, the initiative will produce six resources focusing on governance, data practices, transparency, fraud, and digital identity, aimed at supporting secure AI use, particularly for small and mid-sized institutions.
Dutch Authority for the Financial Markets sets out how generative AI will shift mortgage advisers into an oversight role
The Dutch Authority for the Financial Markets released a speech by board member Jos Heuvelman on the impact of generative artificial intelligence on mortgage advisers and supervision. Heuvelman highlighted that AI will streamline the mortgage advice process, positioning advisers as orchestrators responsible for AI-generated judgments.
Bank for International Settlements publishes research on how AI preparedness shapes productivity gains in emerging market economies
BIS Bulletin No 121 examines AI's impact on productivity, growth, and labor markets in emerging economies. Advanced economies are better positioned for near-term gains, while emerging markets may see smaller benefits due to sectoral composition and uneven AI readiness. AI could boost productivity, but employment effects are uncertain, with potential negative impacts on low-skill jobs.
Central Bank of Russia sets 2026–2028 economic research agenda focused on AI and a monetary policy review
The Central Bank of Russia's 2026–2028 economic research agenda addresses challenges like AI's impact on the economy and financial decision-making. Key areas include monetary policy studies, conditions for reducing the inflation target, and marketplaces' influence on inflation. The agenda also emphasizes behavioural economics, fraud techniques, and retail investor risks to enhance consumer protection.
Bank of England publishes AI roundtable findings as firms back the PRA framework and flag barriers to scaling AI
The Bank of England summarized late-2025 roundtables with Prudential Regulation Authority-regulated firms on AI and ML adoption, highlighting support for a principles-based approach and existing testing frameworks like the FCA's Supercharged Sandbox. Challenges include risk function caution, skills bottlenecks, cross-border regulatory fragmentation, slow procurement, and data protection issues, with calls for enhanced testing and monitoring.
Bank of England publishes Market Participants Group minutes on global growth risks and dovish repricing of the Bank Rate path
The Bank of England released minutes from the Market Participants Group meeting, highlighting discussions on global growth, geopolitical volatility, and artificial intelligence's impact on productivity. The meeting also covered UK market reactions to the February Monetary Policy Committee outcome, noting a dovish response and differing views on macroeconomic outlook and policy restrictiveness.
Financial Markets Standards Board publishes Spotlight Review on AI in trading and governance expectations
The Financial Markets Standards Board published a Spotlight Review on AI in trading, highlighting its early-stage adoption in electronic trading systems and implications for risk and governance in global wholesale markets. AI is integrated within existing infrastructure under human supervision, with current controls addressing many risks but needing updates as AI complexity grows. The AI Working Group aims to develop guidance on model risk management and trading controls for AI models.
Federal Reserve Board research finds AI infrastructure boom drove a 65% rise in trade in servers and graphics cards
Federal Reserve Board staff released a FEDS Notes analysis on AI infrastructure's impact on global trade, noting increased demand for critical inputs since early 2025. U.S. data-center spending exceeded USD 0.5 trillion in 2025. The analysis proposes a narrow trade measurement definition focused on specific Harmonized System categories. AI-related trade surged, with the U.S. and China leading growth, and supplier economies like Taiwan and Mexico benefiting from increased exports.
National Bank of the Kyrgyz Republic publishes survey-based report on artificial intelligence uptake across Central Asian financial markets
The National Bank of the Kyrgyz Republic released a report titled "Artificial Intelligence in the Financial Markets of Central Asia 2025," based on a survey of 232 financial organizations in Kyrgyzstan, Kazakhstan, and Tajikistan, highlighting AI's role in risk management and fraud control. The study reveals 36% of organizations use AI, 56% plan to implement it within a year, and identifies technological development and personnel shortages as challenges for AI readiness in Central Asia.