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
Office of the Superintendent of Financial Institutions signals targeted capital recalibration and a 12-month fast-track approvals process for eligible new entrants
Superintendent Peter Routledge of the Office of the Superintendent of Financial Institutions (OSFI) outlined a strategic shift towards fine-tuning capital standards and regulatory processes, emphasizing evidence-based adjustments. OSFI is recalibrating capital requirements for SMEs and infrastructure investments, modernizing regulatory guidance, and developing a fast-track approvals framework for new market entrants. Supervisory priorities include monitoring AI-related governance risks, housing credit risks, and banks' exposures to private credit funds, focusing on insurers' private market exposures and alignment with IFRS 18.
Commodity Futures Trading Commission launches Innovation Task Force to shape regulatory framework for crypto, AI and prediction markets
The Commodity Futures Trading Commission has launched an Innovation Task Force to establish clearer regulations for novel products and technologies in U.S. derivatives markets. The task force, in collaboration with the Innovation Advisory Committee, will focus on crypto assets, blockchain technologies, artificial intelligence, and prediction markets. It will also coordinate with other federal agencies, including the U.S. Securities and Exchange Commission.
Financial Transactions and Reports Analysis Centre of Canada publishes FIFAI II report on AI risks and the AGILE framework for financial services
FINTRAC released the final report from the Financial Industry Forum on AI Phase II, highlighting AI-related risks and opportunities in Canadian financial services. The report introduces the AGILE framework, focusing on strategic risks, cybersecurity threats, consumer protection, and financial stability, with priorities including enhanced oversight, governance, and AI literacy. The findings reflect individual insights from forum participants and are not official guidance from FINTRAC or other Canadian authorities.
European Central Bank’s Lane highlights rapid euro area AI adoption and sets a 2026-27 plan to embed AI across ECB workflows
ECB Executive Board member Philip R. Lane discussed AI's uncertain impact on the euro area economy, productivity, employment, and inflation. The ECB aims for systematic AI implementation by 2027, amid rising AI adoption and digital investment lagging behind the US. Lane noted financing frictions for AI investment and risks for banks, while the ECB enhances its digital capabilities with machine-learning tools and a central banking digitalisation programme.
U.S. Department of the Treasury launches AI Innovation Series with four public-private roundtables on financial sector AI adoption
The U.S. Department of the Treasury launched the Artificial Intelligence Innovation Series, a public-private initiative to explore AI deployment and oversight in the U.S. financial system. The series will include four roundtables with stakeholders to identify AI use cases and approaches to scaling innovation while ensuring safety. Treasury Secretary Scott Bessent emphasized the need for evolving governance and regulatory frameworks to support AI in financial services.
Australian Securities & Investments Commission adds Moneysmart guidance on using publicly available AI tools for money questions
The Australian Securities & Investments Commission (ASIC) has issued new guidance on its Moneysmart website to assist Australians using AI tools for financial information. It addresses the growing reliance on AI among Gen Z, highlighting potential inaccuracies and advising verification against trusted sources. ASIC also announced an updated Moneysmart website, celebrating 15 years of providing free consumer education.
Monetary Authority of Singapore concludes Project MindForge phase two with an AI risk management toolkit for the financial sector
The Monetary Authority of Singapore concluded phase two of Project MindForge by releasing an AI Risk Management Toolkit for financial institutions. Developed with 24 industry partners, it includes an AI Risk Management Operationalisation Handbook and case studies, structured around MAS’ proposed Guidelines on AI Risk Management. MAS will periodically update the handbook and establish a workgroup under BuildFin.ai to enhance AI risk management resources and capabilities.
European Central Bank issues opinion on EU AI Act simplification proposal with bank supervision information sharing and credit scoring model carve outs
The European Central Bank (ECB) has issued an opinion on amending the Artificial Intelligence Act, advocating for clearer separation between bank supervision and AI market surveillance. The ECB suggests legal provisions for information sharing with national market surveillance authorities and calls for clarification on "high-risk" credit scoring techniques. It recommends excluding certain models from high-risk classification and involving other European financial authorities in guidance for regulated firms.
Sweden's Financial Supervisory Authority invites applications to join Innovationskompassen reference group on reliability of AI-based ESG data
Sweden's Financial Supervisory Authority seeks expressions of interest to join a reference group for its Innovationskompassen project, focusing on the reliability of automated and AI-based ESG data methods. The project aims to address supervisory guidance needs by mapping challenges in ESG data use, including sustainability reporting and risk management. Selected participants will engage in workshops from April to June 2026.
Bank of Italy releases six new Occasional Papers on artificial intelligence, climate data gaps, sustainable finance pricing and corporate lending
The Bank of Italy published six Occasional Papers (Nos. 1001–1006) examining AI's macroeconomic and firm-level effects, sustainable finance pricing, and corporate lending by Italian less significant institutions. Key topics include AI's impact on the US economy, effects on Italian firms, and the use of generative AI in policy briefing and climate data. The studies also explore environmental scores' influence on bond pricing and patterns in corporate lending.
European Council presidency convenes macroeconomic dialogue with social partners on fragile economic outlook and AI’s impact on EU labour markets
The European Council presidency, European Central Bank, European Commission, and Eurogroup President held a Macroeconomic Dialogue with European social partners on economic developments and AI's impact on the EU labour market. The dialogue highlighted the EU's improving yet fragile outlook amid geopolitical tensions and emphasized AI's dual role as a productivity driver and a risk to social cohesion. The Commission noted proposed changes in the Digital Omnibus to support responsible AI uptake, while social partners called for stronger worker protections and regulatory simplification.
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.