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
Germany's Federal Financial Supervisory Authority warns of higher financial stability stress risk and adds consumer top risks to 2026 outlook
Germany's Federal Financial Supervisory Authority's Risks in Focus 2026 report warns that stretched valuations and geopolitical, debt and AI-related uncertainties have raised the risk of abrupt market corrections and a broader test of financial stability. Its main concerns are rising credit risk and non-performing loans, contagion through private-debt funds, and consumer risks including over-indebtedness from buy now pay later products and speculative retail crypto activity. The report adds consumer top risks for the first time and points to tighter monitoring of consumer credit and crypto providers in 2026.
Germany’s Federal Financial Supervisory Authority warns of abrupt market corrections and sets 2026 supervisory priorities on credit, private debt and retail risks
Germany’s Federal Financial Supervisory Authority (BaFin) released its 2026 “Risks in Focus” report, highlighting fragile financial markets and potential for sudden corrections. Key priorities include intensified monitoring of credit risk and links between regulated firms and non-bank intermediaries. BaFin also plans stricter oversight of consumer credit and crypto providers, addressing rising over-indebtedness and social media-driven retail investment.
European Central Bank sets 2026-28 banking supervision priorities and advances plans to streamline SREP and supervisory processes
ECB Executive Board member Frank Elderson outlined 2026-28 priorities: strengthening resilience amid evolving risks, enhancing operational resilience in a digitalized financial system, assessing geopolitical scenarios, evaluating climate and nature-related risks, focusing on cybersecurity, encouraging responsible innovation, and reforming supervisory activities with digital tools.
International Swaps and Derivatives Association chair Amy Hong sets 2026 priorities focused on tokenization and AI-led derivatives market modernization
The International Swaps and Derivatives Association outlined its 2026 priorities, focusing on modernizing derivatives markets with technologies like tokenization and artificial intelligence.
Central Bank of Egypt signs MoU with New Giza University to launch an AI Diploma for bankers through FinTech Egypt’s Digital Academy
The Central Bank of Egypt and New Giza University have launched the first specialized Artificial Intelligence Diploma for Bankers under the "Digital Academy" initiative by FinTech Egypt. This program aims to enhance banking professionals' skills in AI and FinTech, supporting Egypt's digital transformation goals. The diploma includes five training modules on AI fundamentals, techniques, data management, governance, and implementation in banking.
UK Financial Conduct Authority launches Mills Review on how advanced AI could reshape retail financial services
The Financial Conduct Authority (FCA) has initiated the Mills Review and released an engagement paper to gather insights on the impact of advanced artificial intelligence on consumers, retail financial markets, and regulation, with a focus on developments through 2030 and beyond. Feedback is due by 24 February 2026, and while the FCA does not intend to introduce AI-specific regulation, it will continue to apply its principles-based framework.
European Parliament Legal Affairs Committee adopts report calling for opt-out, transparency and remuneration for copyrighted works used to train generative AI
The European Parliament’s Legal Affairs Committee adopted a report proposing transparency and fair remuneration for rightsholders when generative AI uses copyrighted works, including transparency requirements for AI providers and the ability for rightsholders to refuse content use. The report, to be voted on in March, rejects a global licence model and calls for the European Commission to explore voluntary collective licensing agreements and tools to prevent unauthorized AI use.
National Bank of Georgia launches free AI career builder programme for fintech professionals with Ant Group
The National Bank of Georgia, in collaboration with Ant Group, launched the "AI Career Builder for Fintech Professionals" program through the 10x1000 Tech for Inclusion platform, offering free professional development focused on AI's role in fintech innovation. The program employs a blended learning model with self-paced modules and live expert sessions.
Bank for International Settlements working paper finds AI adoption lifts European firms’ labour productivity by 4% without short-run job losses
The Bank for International Settlements published a working paper indicating that AI adoption in European non-financial firms boosts labor productivity by about 4% without reducing firm-level employment short term, with benefits concentrated in medium and large firms. The study, using data from over 12,000 EU firms and 800 US firms, attributes productivity gains to capital deepening and notes higher wages at AI-adopting firms, with stronger effects where complementary investments are made.
U.S. Senate Committee on Banking, Housing and Urban Affairs Democrats urge FSOC to investigate projected USD 1 trillion AI infrastructure debt for financial stability risks
Democratic U.S. Senate Banking Committee members, led by Elizabeth Warren, urged the Financial Stability Oversight Council (FSOC) to investigate financial stability risks from debt financing for AI infrastructure. They highlighted concerns over complex debt structures and potential market stress, requesting FSOC to collaborate with the Treasury's Office of Financial Research and respond by February 13, 2026.
U.S. House Financial Services Committee marks up package including TRIA reauthorization, AI resolution, digital asset cybercrime AML tools and Securities Act changes
The U.S. House Financial Services Committee, led by French Hill, is marking up bills to reinforce the financial system and national security, including reauthorizing the Terrorism Insurance Program, supporting AI in financial services, and combating money laundering in cybercrime. Other proposals include updating financial reporting thresholds, facilitating micro-offerings for small issuers, and preempting state laws for secondary trading.
United States Council of Economic Advisers publishes paper on AI leadership metrics and the risk of a new Great Divergence
The United States Council of Economic Advisers released a paper titled “Artificial Intelligence and the Great Divergence,” exploring AI's potential to create cross-country growth disparities akin to the Industrial Revolution, highlighting emerging leaders in AI investment and adoption. It discusses AI's impact on GDP and labor, underscores uncertainty, and outlines metrics for tracking AI's evolution, alongside reviewing U.S. policy actions to bolster AI leadership.
UK HM Treasury appoints Harriet Rees and Dr Rohit Dhawan as AI Champions to accelerate safe AI adoption in financial services
HM Treasury appointed Harriet Rees and Dr. Rohit Dhawan as AI Champions for Financial Services to support safe AI adoption, focusing on insurance, capital markets, retail investment, and asset management. They will engage with the industry and advise on AI growth opportunities. Reporting to the Economic Secretary, their roles began on 20 January 2026 and end on 30 September 2026, subject to extension.
UK Parliament Treasury Select Committee urges tougher AI oversight including Bank of England and FCA stress testing, FCA guidance and government designations under the Critical Third Parties Regime
The UK Parliament’s Treasury Select Committee report criticizes the Bank of England, Financial Conduct Authority (FCA), and Treasury for inadequately managing AI risks in financial services. It highlights that over 75% of UK financial firms use AI, urging AI-specific stress testing and FCA guidance on consumer protection by end-2026. The report also calls for designating critical AI and cloud providers under the Critical Third Parties Regime.
Dutch Authority for the Financial Markets sets 2026 supervision priorities on DORA cyber resilience responsible AI and financial crime
The Dutch Authority for the Financial Markets has released its Agenda 2026, emphasizing enhanced supervision of digital operational resilience, responsible artificial intelligence use, and financial crime prevention. Key initiatives include intensified oversight of AI risks, strengthened digital resilience under the Digital Operational Resilience Act, and coordinated actions against investment fraud and money laundering.
International Monetary Fund lifts global growth forecast to 3.3% as AI investment boom offsets tariff shock but raises financial stability risks
The International Monetary Fund (IMF) projects global growth to reach 3.3% in 2026, attributing resilience to easing trade tensions and increased IT investment, particularly in artificial intelligence. The IMF highlights risks from concentrated tech investment and debt reliance, urging strong prudential oversight and flexible monetary policy to manage potential shocks and AI-driven market disruptions.
Central Bank of Cyprus publishes Governor article warning artificial intelligence could affect 40% of jobs and urging reskilling
The Central Bank of Cyprus published an article by its Governor on the transformative impact of artificial intelligence (AI) on the economy, highlighting potential productivity gains and job displacement risks. The article emphasizes the need for Cyprus to prioritize reskilling, business-model adaptation, and support for affected groups amid AI-driven changes.
State Bank of Vietnam governor joins BIS emerging market central bank meeting focused on AI’s economic and financial stability effects
Governor Nguyen Thi Hong of the State Bank of Vietnam attended a Bank for International Settlements meeting, discussing AI's impacts on productivity, labour markets, and financial stability. She noted AI's growing role in Vietnam's banking sector, enhancing productivity and reducing costs, while emphasizing the need for balanced monetary policy to manage trade-offs between long-term growth and short-term investment demands.
Prudential Regulation Authority sets 2026 supervisory priorities for UK deposit takers and plans wider shift to two-year periodic summary meeting cycles
The Prudential Regulation Authority has written to CEOs of PRA-regulated UK banks and building societies setting out its 2026 supervisory priorities, emphasising strategic risk management, operational and financial resilience, data risk, and support for innovation aligned with its secondary objectives on competition, international competitiveness and growth. Key expectations include enhanced oversight of changing risk profiles, implementation of updated significant risk transfer and model risk management standards, strengthened operational resilience and cyber preparedness, and preparation for Basel 3.1 and the Strong and Simple Framework. The PRA will also rebase variable Pillar 2 requirements in 2026 and continue modernising reporting and authorisation processes.
United Kingdom's Prudential Regulation Authority sets 2026 insurance supervision priorities and plans move to two-year Periodic Summary Meetings
The UK Prudential Regulation Authority has set 2026 supervisory priorities for insurers, focusing on resilience and risk management amid competitive pressures in the bulk purchase annuity market, a softening general insurance underwriting cycle, and the need to strengthen operational resilience. Life insurance supervision will centre on pricing discipline, funded reinsurance and liquidity and credit risks in evolving investment strategies, while general insurers face closer scrutiny of underwriting, reserving, internal model assumptions, exposure data and delegated authority oversight. Cross-sector work will intensify on operational resilience testing, third-party risk, legacy technology, cyber risk and AI governance.
United Kingdom's Prudential Regulation Authority sets 2026 supervisory priorities for UK-active international banks and plans move to two-year PSM cycle
The Prudential Regulation Authority has written to chief executives of PRA-regulated international banks and designated investment firms in the UK setting out its 2026 supervisory priorities, emphasising risk management and governance, operational and financial resilience, and data risk, while adjusting supervision to support innovation and reduce regulatory burden. Key expectations include stronger counterparty credit and model risk management, prudent adoption of technologies such as artificial intelligence and distributed ledger technology, enhanced operational resilience and cyber capabilities, and preparations for Basel 3.1 and the Strong and Simple Framework. The PRA will also move remaining firms from annual to two-year Periodic Summary Meeting cycles in 2026 and is encouraging engagement on streamlined reporting and regulatory permissions ahead of capital regime changes.
BIS publishes working paper finding higher US household GenAI use than Italy driven by demographics
The Bank for International Settlements released a working paper analyzing generative artificial intelligence (GenAI) adoption in the United States and Italy, revealing higher usage in the US primarily due to socio-demographic differences. Despite lower usage, Italians have more optimistic expectations for GenAI's impact on well-being and financial wealth, with higher trust in government data handling compared to their US counterparts.
IMF analysis finds rising demand for new and AI-related skills with higher wages but uneven employment effects
The International Monetary Fund's research highlights that artificial intelligence and digital technologies are reshaping labor markets, with a growing demand for new skills and wage premiums, particularly in professional and technical roles. The study introduces a Skill Imbalance Index to assess future skill demand and supply, recommending policy measures to enhance education and innovation, while noting AI-related skills have not yet driven employment growth.
International Monetary Fund staff note quantifies AI-era skill demand and introduces Skill Imbalance and Readiness indices
The International Monetary Fund released a Staff Discussion Note analyzing how emerging IT and AI skills are transforming labor markets, wages, and employment, proposing new metrics to assess skill gaps. The note highlights that demand for new skills can increase wages and employment but may exacerbate job polarization, with AI-related skills linked to weaker employment in certain occupations, and suggests policies to address skill imbalances.
France's Financial Markets Authority sets 2026 priorities on capital markets competitiveness, MiCA transition and operational resilience supervision
France's Financial Markets Authority (AMF) has outlined its 2026 priorities under the “Impact 2027” framework, focusing on capital market development, sustainable finance, innovation, and market safety. Key initiatives include supporting the European Commission’s Savings and Investments Union agenda, revising issuer doctrine, simplifying Sustainable Finance Disclosure Regulation (SFDR) rules, and finalizing an artificial intelligence roadmap, with significant milestones like the end of the Markets in Crypto-Assets Regulation (MiCA) transitional period on 30 June 2026.