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
U.S. Senate Committee on Banking, Housing and Urban Affairs ranking member challenges NVIDIA CEO over declining public AI testimony
Senate Banking Committee Ranking Member Elizabeth Warren criticized NVIDIA CEO Jensen Huang for declining public testimony while meeting privately with Republican senators. She called for answers on NVIDIA’s position on advanced AI chip exports to China and Huang’s lobbying against related bipartisan legislation.
Monetary Authority of Singapore and Association of Banks in Singapore establish task force on AI-driven cyber risks
The Monetary Authority of Singapore and the Association of Banks in Singapore have established an industry task force to address cyber and technology risks from frontier AI models. It will support information sharing, test AI-enabled defence tools and develop guidance for financial institutions.
Bank for International Settlements assesses how debt-financed AI investment boom complicates monetary policy calibration
The Bank for International Settlements finds that the AI boom is delivering a large, increasingly debt-financed investment impulse while its productivity payoff remains uncertain. Simultaneous effects on demand and supply are blurring cyclical signals and complicating monetary policy calibration. Potential financial stability risks include overinvestment, weaker credit quality and a correction in AI-related asset prices.
European Central Bank Banking Supervision requires cyber action plans by October, reinforces AI accountability
European Central Bank Banking Supervision expects bank boards and senior management to remain accountable for AI use and associated risks. Banks must submit cyber action plans by October 2026 addressing resilience, incident response and critical third-party oversight. The ECB also plans to publish the outcome of its 2026 geopolitical reverse stress test.
European Central Bank study finds widespread but shallow AI adoption across euro area firms
A European Central Bank study found that about 70% of euro area firms use AI, but only 7% report significant adoption, with skills, privacy concerns and system incompatibility constraining wider use. AI investment relies mainly on internal funds, and intensive users report stronger turnover and investment expectations without evidence of workforce reductions. Firms substantially underestimate competitors’ adoption, while correcting those perceptions increases their own planned AI investment.
Hong Kong Monetary Authority reports HKD 134.7 billion Exchange Fund investment income for first half of 2026
The Hong Kong Monetary Authority reported HKD 134.7 billion of Exchange Fund investment income for the first half of 2026, as gains on bonds, overseas equities and currency translation outweighed losses on Hong Kong equities. Total assets rose to HKD 4,463.6 billion at end-June, while accumulated surplus reached HKD 862.7 billion. The authority warned that market and exchange-rate volatility could weigh on second-half results.
Egypt Financial Regulatory Authority preliminarily admits two AI insurance projects to sandbox, raising first-year total to seven
The Egypt Financial Regulatory Authority has preliminarily admitted two AI insurance projects to its regulatory sandbox for testing before commercial launch. The additions bring the sandbox’s first-year total to seven projects, with insurance the most represented sector.
Bank of the Lao PDR calls for joint China ASEAN governance of AI related financial risks
The Bank of the Lao PDR called for joint China-ASEAN governance mechanisms to manage cybersecurity and systemic risks from AI in finance. Its deputy governor also joined the launch of an AI and finance cooperation project and discussions on AI-enabled local-currency cooperation.
Central Bank of the Philippines urges banks and other supervised entities to strengthen cybersecurity against AI-driven threats
The Central Bank of the Philippines has urged banks and other supervised entities to strengthen cybersecurity in response to AI-related cyber risks. Its memorandum calls for tighter security controls, better asset and vulnerability management, greater use of AI-based defensive tools, and stronger incident response and business continuity planning.
Canadian Public Accountability Board publishes audit committee insights on AI, cybersecurity, IFRS 18 implementation and public inspection reports
The Canadian Public Accountability Board published insights from its 2026 audit committee outreach, with AI, cybersecurity, IFRS 18 implementation and firm-specific public inspection reports identified as the main oversight issues. Discussions pointed to uneven IFRS 18 readiness, closer scrutiny of AI governance and auditors’ use of technology, and demand for timely inspection reports that can inform auditor assessments. IFRS 18 takes effect for annual periods beginning on or after January 1, 2027, with related Canadian Securities Administrators changes expected in fall 2026.
U.S. Senate Committee on Banking, Housing and Urban Affairs ranking member invokes ECRA to require BIS records on AI chip export control loopholes
Elizabeth Warren, the ranking member of the U.S. Senate Committee on Banking, Housing and Urban Affairs, invoked the Export Control Reform Act to require BIS records on alleged loopholes in advanced AI chip export controls. She argued that BIS’s rescission and non-enforcement of the AI Diffusion Rule undermined the Foundry Due Diligence Rule and could allow renewed diversion of advanced chips to China. Warren requested the information by Aug. 6, 2026.
Polish Financial Supervision Commission issues recommendations on Frontier AI cyber risks for financial market entities
The Polish Financial Supervision Commission has issued recommendations telling financial market entities to reassess ICT risk management and operational resilience for cyber threats linked to Frontier AI. Firms should incorporate AI threat scenarios into DORA processes, prioritize vulnerability management, third-party risk and protection of internet-facing assets, and ensure senior management allocates sufficient resources. UKNF said the adequacy and effectiveness of firms' measures will be tested through ongoing supervision and inspections.
Payments Canada discusses agentic autonomous finance and the need for agent-aware payment rails
Payments Canada outlined a panel discussion on agentic autonomous finance and the implications of AI agents becoming active participants in payments and other financial activity. The update centers on identity, trust and control challenges, with discussion focused on tokenized assets, cryptographic trust and agent-aware payment rails. It also points to preparation needs for Canadian institutions and regulators.
Financial Conduct Authority selects 21 firms for second Supercharged Sandbox cohort, adds Anthropic support and launches Agentic Academy
The Financial Conduct Authority has selected 21 organisations for the second cohort of its Supercharged Sandbox and added Anthropic as a technology partner. Participants will use Claude tools to test advanced AI applications in areas including payments, fraud detection, governance, inclusion and compliance. The FCA also launched Agentic Academy, a 10-week AI programme for selected firms.
CDP launches optional AI-powered Suggested Response tool for the 2026 disclosure cycle, available to all disclosers from 23 July
CDP has introduced an optional AI-powered “Suggested Response” feature for its 2026 disclosure cycle, with rollout to all disclosers from 23 July 2026. The tool uses existing company documents to generate draft responses to CDP questionnaire items, while leaving organizations responsible for final review and submission. CDP said early testing showed 40% faster preparation and 25% higher response and completion rates.
Bank for International Settlements bulletin examines frontier AI cyber risks and urges swift defensive adoption
The Bank for International Settlements published a bulletin warning that frontier AI can strengthen both cyber offence and defence, but that cost asymmetries may leave attackers with an advantage. It says the impact on systemic cyber risk will depend on access to advanced models, compute and incentives, and it calls for rapid defensive adoption of these tools. The bulletin also highlights the need for stronger domestic and cross-border coordination, especially around vulnerability remediation, third-party risk and resilience planning.
Federal Reserve Board publishes AI buildout tracker, finds investment and adoption rising but broad labor effects limited
The Federal Reserve Board published a FEDS Note outlining public indicators to track generative AI's economic effects across capabilities and costs, firm investment and adoption, and productivity and labor. The note finds rapid capability gains, heavy investment and rising adoption, but says aggregate productivity and labor market effects remain limited and concentrated as of 2026.
Australian Securities & Investments Commission sets out four priorities for market innovation and capital formation after industry roundtable
The Australian Securities & Investments Commission published Report 835 and a summary of its market innovation roundtable, identifying four priorities for Australia’s capital markets. These were global competitiveness, stronger core infrastructure, innovation aimed at real market frictions and productivity, and investor protection through clear rules and safeguards. ASIC plans targeted industry workshops and engagement with regulatory peers before reconvening participants.
Organisation for Economic Co-operation and Development publishes paper on AI and Open Finance, highlighting synergies, trade-offs and amplified risks
The Organisation for Economic Co-operation and Development has published a paper on the interaction between AI and Open Finance in financial services. It says shared financial data can strengthen AI-driven personalisation, efficiency and inclusion, but can also intensify risks around bias, privacy, cybersecurity and consumer protection. The paper also flags trade-offs on consent, data minimisation and market structure, and points to stronger governance and cross-sector co-operation as key safeguards.
Czech National Bank research brief finds AI can affect 23.2% of Czech occupational tasks, with exposure concentrated in cities and information intensive sectors
The Czech National Bank published a research brief estimating that AI can affect 23.2% of tasks linked to Czech occupations. Exposure is concentrated in larger cities, finance and other information-intensive sectors, and among higher-wage and more educated workers. The brief says this uneven pattern could matter for inflation, household resilience and banks’ credit risk.
Federal Reserve Board note links the US AI buildout to stronger high tech imports prolonged current account deterioration and import price risks
The Federal Reserve Board published a FEDS Note saying the U.S. AI investment boom is likely to increase imports of high-technology equipment, widen the current account deficit and raise import price pressures. The analysis finds that investment-specific technology shocks have historically worsened the current account by about 10 percent relative to its average deficit, with potentially larger and longer-lasting effects now because AI supply chains are concentrated in East Asia and equipment prices have started to rise. Foreign spillovers are strongest for key technology suppliers such as Taiwan, Korea and Mexico.
Central Bank of the Philippines issues voluntary AI governance principles for supervised financial institutions
The Central Bank of the Philippines has issued voluntary AI governance principles for all BSP-supervised financial institutions. The STARS-based guidance sets minimum supervisory expectations for firms developing AI governance and risk management frameworks, with proportionate application based on the scale and risk of their AI use. It also covers outsourced providers involved in AI-related activities under a shared responsibility model.
Bank for International Settlements publishes working paper finding AI investment may exceed efficient levels by around 50% and heighten bust risks
The Bank for International Settlements published a working paper arguing that the AI build-out may be generating material over-investment and financial fragility. Its model estimates investment at about 50% above the efficient level under a conservative baseline, with debt and circular financing increasing the risk of fire sales and contagion. The paper also finds risks rise sharply as the build-out grows, with expected net economic surplus turning negative at around USD 3 trillion in investment.
Organisation for Economic Co operation and Development flags intensifying AI competition risks despite rapid price declines and new entry in foundation models
The Organisation for Economic Co-operation and Development said AI markets show a mixed competitive picture. Foundation models have become cheaper and more crowded, but the OECD warns that concentration in chips, cloud, data and skills, combined with first-mover advantages and vertical integration, could entrench a small number of firms. It calls for closer monitoring and policy action to preserve contestability across the AI value chain.
Dubai Financial Services Authority reports stronger audit inspection results and first transparency reports for Public Listed Company auditors
The Dubai Financial Services Authority's latest Audit Monitoring Report shows improved audit inspection results in the Dubai International Financial Centre and introduces the first transparency reports by auditors of Public Listed Companies under DFSA rules. The cycle covered 26 inspections across 93 files, while audit fees rose 74% to USD 33.5 million and the DFSA flagged engagement staffing and five recurring audit quality themes for further attention. Its 2026 inspection focus will include Systems of Quality Management, artificial intelligence in audit and revenue recognition.