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
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.
New York State Department of Financial Services publishes Governor Hochul 2026 proposals creating DIGIT office and tightening rules on data brokers, AI content and student loan lenders
The New York State Department of Financial Services released Governor Kathy Hochul’s 2026 State of the State proposals, focusing on consumer and worker protections through a new Office of Digital Innovation, Governance, Integrity and Trust, and advancing legislation on data privacy, AI transparency, and election-related misinformation. Key measures include data broker registration, AI content labeling, deepfake bans, and various tax and lending reforms.
Commodity Futures Trading Commission launches Innovation Advisory Committee and seeks nominations by 31 January 2026
The Commodity Futures Trading Commission has launched the Innovation Advisory Committee, formerly the Technology Advisory Committee, to advise on technological innovation in financial services, derivatives, and commodity markets, with a focus on AI, blockchain, and cloud computing. Chaired by Michael S. Selig, the committee will include diverse industry viewpoints and is accepting nominations and topic suggestions until 31 January 2026.
Bank of Korea issue note finds Korea had about 57,000 AI workers in 2024, with rising wage premiums and persistent overseas outflows
The Bank of Korea published an issue note estimating Korea had about 57,000 AI workers in 2024, with 58% holding master's or doctoral degrees and 64% trained in engineering. It found a 6% AI-skill wage premium, strong hiring demand from firms and persistent outward mobility, with about 16% of AI workers employed overseas.
Securities and Exchange Board of India forms working group to develop 5-year and 10-year technology roadmap for market infrastructure institutions
The Securities and Exchange Board of India has established a Working Group to develop five-year and ten-year technology roadmaps for Market Infrastructure Institutions, addressing emerging technologies such as artificial intelligence, distributed ledger, and quantum-safe systems. The initiative, chaired by Dr. D.B. Phatak, aims to enhance market operations, surveillance, risk management, investor protection, and regulatory oversight.
Bank for International Settlements research finds AI investment boom is shifting funding from cash flows to debt as private credit lending tops USD 200 billion
The Bank for International Settlements published a BIS Bulletin analyzing the impact of the AI investment boom on macroeconomic outcomes and corporate financing, noting a shift from funding capital expenditure with operating cash flows to increased debt use. The Bulletin highlights moderate macroeconomic and financial stability risks, contingent on AI firms meeting high earnings expectations, with significant growth in AI-related investments in the U.S. contributing notably to GDP growth.
Austrian Financial Market Authority reports record EUR 19.6 million in 2025 investment fraud and warns of deepfakes WhatsApp groups and AI bots
The Austrian Financial Market Authority (FMA) reported a rise in investment fraud techniques in 2025, including deepfake celebrity videos, WhatsApp groups, and AI chatbots, with 843 fraud reports and EUR 19.6 million in losses. The FMA issued 97 warnings about unauthorised providers, highlighted challenges in investigating fraud via private social media channels, and plans to continue consumer education initiatives in 2026.