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
Bank for International Settlements finds circular AI investment relationships increase opacity and macroeconomic risks
The Bank for International Settlements found that circular investment and supply chain relationships are widespread among AI firms, accounting for 46.4% of AI-to-AI deal value between 2021 and 2025. While these arrangements can secure critical inputs and address financing frictions, they can obscure demand and amplify interconnected losses. Complex terms, limited disclosures and cross-jurisdictional exposures also make the risks difficult to monitor.
European Central Bank President Lagarde urges systemwide action on AI risks to trading, cyber resilience and model access
European Central Bank President and ESRB Chair Christine Lagarde urged systemwide monitoring of AI risks to trading, cyber resilience and access to frontier models. She called for updated cyber defences, coordinated response plans and stronger European AI capabilities to reduce dependence on externally controlled technology.
Bank for International Settlements’ Basel Committee approves machine-readable Pillar 3 standard and G-SIB window-dressing revisions
The Bank for International Settlements’ Basel Committee approved a final machine-readable Pillar 3 standard, G-SIB assessment results and revisions to curb year-end window dressing. It will consult on stronger Pillar 2 guidance for interest rate risk and the treatment of European banking union exposures in the G-SIB framework. Updates on the cryptoasset standard review, liquidity principles and final Pillar 3 requirements are expected by the end of 2026.
Australia's Council of Financial Regulators flags rising bond yields and AI-related cyber threats
Australia's Council of Financial Regulators said rising longer-term bond yields warrant close monitoring, although markets remain orderly and the domestic financial system is well placed to manage shocks. It urged financial institutions to strengthen resilience and flagged increasingly complex cyber threats from frontier artificial intelligence. The Council may meet more frequently if needed.
Reserve Bank of Australia finds financial system resilient but warns global and operational vulnerabilities are mounting
The Reserve Bank of Australia assessed the financial system as resilient, with most borrowers able to withstand weaker conditions and banks capable of continuing to lend during a severe downturn. The main risks stem from global market vulnerabilities, geopolitical tensions and operational threats linked to AI, cyberattacks and concentrated service providers. Financial institutions should strengthen operational recovery, crisis testing and liquidity risk management while maintaining prudent lending standards.
Federal Reserve Board analysis finds AI skills in 11% of manufacturing job postings and a 70% advertised wage differential
Federal Reserve Board analysis finds that AI related skills reached 11% of manufacturing job postings, led by demand for machine learning capabilities. AI related postings advertised wages averaging about 70% more across manufacturing, while the differential for production roles has averaged roughly 30% since 2023.
Executives’ Meeting of East Asia-Pacific Central Banks assesses AI shocks, financial stability risks and central bank adoption
The Executives’ Meeting of East Asia-Pacific Central Banks assessed how AI could generate interacting economic and financial shocks, including labor disruption, asset price corrections, rising leverage and concentration among technology providers. About half of member central banks used AI for general tasks as of 2025, with some expanding into specialized functions. The note emphasizes human oversight, strong governance, systemwide supervision and regional cooperation.
Financial Stability Board Americas group examines stablecoin risks, emerging technology and crisis preparedness
The Financial Stability Board’s Americas regional group assessed financial stability risks from geopolitical uncertainty, extreme weather, capital flows and exchange rates. Members also discussed global stablecoin arrangements, AI and quantum computing risks, and preparedness for cyber incidents and third-party outages.
Australian Securities and Investments Commission sets 2026–27 sector supervisory priorities spanning AI, conduct and member services
The Australian Securities and Investments Commission has set sector-specific supervisory priorities for 2026–27, covering AI, lender conduct, superannuation services, insurance practices and market integrity. The plans were coordinated with other regulators to reduce duplication and give regulated entities earlier visibility of upcoming supervisory work.
Federal Reserve Board Governor Christopher Waller highlights trust and security challenges as AI agents reshape payments
Federal Reserve Board Governor Christopher Waller said AI could improve cross-border screening, routing and liquidity management while increasing cybersecurity risks. Scaling autonomous agent payments will require new authentication, liability and fraud controls, as well as decisions on interoperable standards and open versus closed commerce systems.
US Federal Reserve Board Vice Chair Bowman urges community banks to strengthen cyber defenses as AI expands threats
Federal Reserve Board Vice Chair for Supervision Michelle W. Bowman urged community banks to reinforce cyber hygiene as AI makes attacks faster and more sophisticated. She emphasized core controls, employee training, incident response testing and active oversight by boards and senior management. AI can also strengthen defenses, but banks should deploy it with sound risk management.
Swedish Financial Supervisory Authority launches review of financial firms’ defenses against AI enabled cyberthreats
The Swedish Financial Supervisory Authority has launched an on-site review of how financial firms address cyberthreats from advanced AI models. It will assess whether firms identify emerging risks and adapt their measures to prevent, detect and manage increasingly automated attacks.
Arab Monetary Fund convenes finance ministers on fiscal policy, artificial intelligence and international tax coordination
The Arab Monetary Fund convened Arab finance ministers to discuss fiscal policy, artificial intelligence, sustainable infrastructure finance and international tax developments. The meeting also reviewed preliminary findings from a new annual public finance report due in May 2027 and coordinated regional positions ahead of the IMF and World Bank Annual Meetings.
Federal Reserve Board Governor Cook says AI is delaying disinflation and may disrupt labor markets
Federal Reserve Board Governor Lisa D. Cook said AI investment is adding near-term inflation pressure that productivity gains are unlikely to offset later in 2026. She warned that deeper adoption could temporarily increase unemployment through skills mismatches, while reiterating that future rate adjustments will depend on inflation, labor data and the economy's response to recent tightening.
United Arab Emirates Ministry of Finance convenes Arab finance leaders on financial stability, AI and tax standards
The United Arab Emirates Ministry of Finance convened Arab finance leaders to discuss fiscal conditions, macroeconomic resilience, AI, sustainable finance and international tax standards. The UAE outlined plans to move 50% of federal operations and services to Agentic AI models within two years and reiterated its application of the domestic minimum top-up tax from 2025.
Central Bank of Malta sets 2027-2030 strategy focused on price stability, financial resilience and digital transformation
The Central Bank of Malta’s 2027-2030 strategy prioritizes stronger monetary and macroprudential analysis, financial-sector resilience, secure payments and digital transformation. It will broaden surveillance of emerging risks, strengthen crisis preparedness, support pan-European payment solutions and digital euro readiness, and further integrate sustainability criteria into financial asset management.
United Arab Emirates Ministry of Finance assesses agentic AI across six financial processes
The United Arab Emirates Ministry of Finance convened a Customer Council to assess the responsible use of agentic AI across six financial processes. Recommendations from the sessions will guide service redesign and the governance and monitoring of future digital services.
Bank for International Settlements maps limited scope for AI and robots to offset workforce ageing across 135 economies
A Bank for International Settlements bulletin finds that AI and robot exposure is often concentrated in industries with younger workforces, limiting automation’s ability to offset population ageing. Its index covering 135 economies shows more favourable conditions in richer economies overall, although several advanced economies face poor alignment. Policy responses may require greater labour force participation, worker mobility or immigration where automation potential is limited.
Monetary Authority of Singapore unveils AI workforce initiatives, 23 financial institutions commit to train over 80,000 employees by 2028
The Monetary Authority of Singapore unveiled initiatives to prepare financial sector employees for AI driven job changes. Under the new IBF AI Workforce Co-Lab, 23 institutions will train more than 80,000 Singapore employees in critical AI skills by 2028 and develop role specific pathways for leaders, wealth managers and operations staff. Additional measures cover job redesign, career transitions and AI training for undergraduates.
Monetary Authority of Singapore outlines expanded AI training and 1,000 financial sector internship and traineeship opportunities
The Monetary Authority of Singapore outlined expanded financial sector workforce measures, including nearly 60 accredited AI programs and training on responsible AI use. Around 1,000 internship and traineeship opportunities from 20 financial institutions will be available over the next year, supported by closer links between education and industry.
Slovenia Insurance Supervision Agency assesses insurance growth and concentration risks from AI and energy investment
The Slovenia Insurance Supervision Agency assessed how AI, data center and energy investment is expanding commercial insurance demand while increasing geographic and supply chain concentration risks. Slovenian gross written premiums rose 14.5% to EUR 1.22 billion in the first half of 2026, with surety insurance premiums doubling amid strong infrastructure investment.
Australian Securities & Investments Commission strengthens algorithmic and AI trading safeguards under 2028 market integrity rule changes
The Australian Securities & Investments Commission has finalized stronger, technology neutral controls for automated and AI enabled trading, with amended Market Integrity Rules taking effect in 2028 after an 18-month transition. The reforms strengthen algorithm testing, monitoring and governance while harmonizing requirements across securities and futures markets. ASIC is also consulting on consolidated guidance that would reduce relevant material for securities participants by almost 60%.
Dutch Authority for the Financial Markets finds low consumer engagement with finances as AI use expands
The Dutch Authority for the Financial Markets found that many consumers have limited knowledge of their pensions and insurance and rarely revisit financial choices. One in seven used AI for financial matters in the past year, while embedded insurance and low reporting of suspected investment fraud highlight emerging consumer protection risks.
European Securities and Markets Authority announces 2027 digital innovation supervisory priority focused on AI and tokenisation
The European Securities and Markets Authority will begin a digital innovation supervisory priority in 2027, initially focusing on supervised entities’ use of AI and tokenisation. Authorities will map client facing uses, build common supervisory approaches and conduct initial checks on selected firms. The initiative will operate alongside the continuing cyber and operational resilience priority as the ESG disclosures priority closes.
Central Bank of Iceland keeps countercyclical capital buffer at 2.5% as economic slowdown and cyber threats test resilience
The Central Bank of Iceland kept the countercyclical capital buffer at 2.5%, finding that strong banks and low private-sector indebtedness support financial stability. A cooling economy and housing market could increase pressure on construction companies, while AI-enabled cyberattacks require stronger defenses and coordinated incident preparedness. Offline payment card functionality has now been implemented to strengthen payment resilience.