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
Guernsey Financial Services Commission tells firms to review technology risk controls as AI speeds vulnerability discovery
The Guernsey Financial Services Commission has told regulated firms to review technology risk management after advances in AI increased the speed and scale of software vulnerability discovery. Its Dear CEO letter focuses on vulnerability management, patching and outsourced provider oversight. Boards and senior management are expected to ensure technology risk is monitored continuously and that remediation can be accelerated without weakening controls.
European Central Bank Banking Supervision directs significant institutions to submit AI cyber-risk action plans by October 31
European Central Bank Banking Supervision has directed significant institutions to assess AI-enabled cyber threats and submit action plans by October 31, 2026. Plans must address accelerated patching, exposed assets, monitoring, third-party risk and longer-term operational resilience. The ECB has extended the annual IT Risk Questionnaire deadline to February 2027 to support this work.
Dutch Authority for the Financial Markets publishes Financial Stability Committee warning on AI driven cyber risk and private credit transparency
The Dutch Authority for the Financial Markets published a Financial Stability Committee update warning that advanced AI models are increasing the urgency of stronger cyber resilience in finance. The committee called for faster vulnerability management and better coordination and information sharing across sectors. It also said private credit's rapid growth requires better data on exposures, credit quality and links to the wider financial system.
De Nederlandsche Bank reports Financial Stability Committee urges stronger cyber coordination and better private credit data
De Nederlandsche Bank said the Dutch Financial Stability Committee has warned that advanced AI models are changing cyber risk and that financial institutions need to adapt their risk management and resilience. The committee also said financial stability risks remain high and called for stronger cross-sector cyber coordination and information sharing. It separately flagged rapid private credit growth and said better data are needed on exposures, credit quality and interconnectedness.
European Systemic Risk Board warns frontier AI models could intensify systemic cyber risks in EU finance
The European Systemic Risk Board has warned that frontier AI models could raise systemic cyber risks for the EU financial system by helping threat actors find vulnerabilities and conduct attacks faster and at greater scale. It also flagged strategic dependency risks from the concentration of leading AI providers outside the EU. The ESRB will review the issue in its quarterly risk assessments and may take further action if needed.
European Banking Authority backs ESRB warning on frontier AI cyber risks and urges stronger financial sector defences
The European Banking Authority, alongside the other European Supervisory Authorities, backed the ESRB warning that frontier AI models are increasing systemic cyber risks for the financial sector. It urged financial entities to strengthen cybersecurity capabilities and called on supervisors to reflect the risks in their oversight. The authorities will continue monitoring the issue and clarify supervisory expectations under DORA.
Central Bank of the Philippines issues frontier AI cyber risk recommendations including hardware-backed MFA for privileged access
The Central Bank of the Philippines issued guidance for supervised institutions on managing cybersecurity risks from frontier AI systems that could automate vulnerability discovery and multi-stage attacks. It recommends stronger attack-surface visibility, zero trust and patching controls, hardware-backed MFA for privileged access with passwords and SMS or push methods discontinued for that purpose, AI-enabled defensive tools, business continuity reviews and institution-specific AI governance frameworks.
Federal Reserve Board publishes staff note on AI driven investment booms and overinvestment risk
The Federal Reserve Board published a staff FEDS Note arguing that major technologies such as AI can trigger long investment booms but can also end in overinvestment and excess capacity. The note says this can happen in a fully rational setting when investors learn about the scale of a technology shock through continued investment. It links the framework to the 1990s IT boom and to the recent AI-driven rise in U.S. IP and equipment investment.
OECD working paper finds AI could partly offset ageing-related growth drag but may be harder to deploy in older societies
The OECD has published a working paper arguing that AI could partly offset the economic drag from population ageing through productivity gains and relief for labour shortages. Using PIAAC data, it finds overall AI exposure peaks in mid-career, while younger workers face more automation exposure and older societies may struggle more with the reskilling, labour reallocation and business dynamism needed to capture AI gains. The paper also highlights risks for entry-level jobs and says more research is needed on the long-run productivity effects of AI.
Financial Conduct Authority publishes retail finance AI review with seven recommendations on agentic finance and supervision
The Financial Conduct Authority has published The Mills Review, concluding that AI will reshape retail financial services by 2030 through changes to firm operations, consumer journeys, competition and fraud and cyber risk. The report says about 11 million UK adults would likely use autonomous AI within pre-set goals and recommends seven actions, including adapting regulation, scaling the FCA's AI Lab and preparing for agentic finance and AI-enabled supervision. The FCA also plans an AI good and poor practice publication later this year.
Vietnam State Securities Commission joins review at Ho Chi Minh Stock Exchange to inform Securities Law amendments
The Vietnam State Securities Commission joined a review at the Ho Chi Minh Stock Exchange to assess implementation of the Securities Law and support planned amendments under the National Assembly's 2026 legislative program. Ho Chi Minh Stock Exchange proposed stronger use of artificial intelligence and big data in market surveillance, broader exchange-traded fund rules, and continued infrastructure and supervisory upgrades. Discussions also covered administrative simplification, new products and services, and a securities sandbox.
Monetary Authority of Singapore publishes SAFR framework for runtime safeguards on AI agents in finance
The Monetary Authority of Singapore has published the SAFR white paper, an industry framework for runtime safeguards on AI agents in financial services. It proposes governance checkpoints that verify and record proposed actions before execution so agents operate within firms’ mandates, policies and risk limits. MAS also said future adoption will be supported through BuildFin.ai collaboration, pilots and sandbox testing.
Securities Commission Malaysia launches consultation on corporate governance reforms including shareholder litigation fund and technology oversight
Securities Commission Malaysia has launched a consultation on reforms to strengthen Malaysia’s corporate governance framework. The proposals would tighten requirements for company secretaries, create a shareholder litigation fund, set clearer governance expectations for companies with concentrated ownership, and clarify board oversight and disclosure expectations for technology and artificial intelligence. Feedback is open until 31 July 2026.
Intergovernmental Action Group against Money Laundering in West Africa outlines summit recommendations on AML governance, AI controls and regional supervisory expectations
The Intergovernmental Action Group against Money Laundering in West Africa published recommendations from its 2026 West African Compliance Summit calling for stronger integration of governance, Enterprise Risk Management and AML/CFT/PF compliance. Participants urged regional peer learning, proportionate minimum expectations for AML supervisory tools, and stronger controls around AI use, including validation, explainability, human oversight and board reporting. They also called for better information sharing and closer public-private and cross-border cooperation.
World Federation of Exchanges publishes Mythos AI paper and urges stronger existing cyber resilience frameworks
The World Federation of Exchanges has issued a position paper on the Mythos AI model, saying it reinforces existing cybersecurity trends rather than creating a wholly new threat. For exchanges and clearinghouses, the paper points to stronger vulnerability management, patching, access controls and incident response, alongside continued industry coordination and information-sharing.
International Monetary Fund identifies systemic AI cyber risks and sets out seven resilience actions
The International Monetary Fund warns that AI could turn vulnerabilities in shared financial technologies and critical service providers into rapid, correlated disruptions. It recommends seven resilience actions covering surveillance, third-party oversight, cross-sector exercises, incident reporting, international coordination and frontier AI monitoring. Financial institutions should prioritize containment, recovery and machine-speed defenses.
French Financial Markets Authority publishes 2026 market and risk mapping highlighting geopolitical cyber and frontier AI risks
The French Financial Markets Authority has issued its 2026 market and risk mapping, highlighting geopolitical instability, cyber risk, market resilience and the rise of advanced frontier AI models. It also points to changes in household financial savings amid innovation and increasing risks.
Australian Securities & Investments Commission convenes capital markets roundtable after report warns Australia must move faster on market innovation
The Australian Securities & Investments Commission has convened a capital markets roundtable and published a report warning that Australia must move faster on financial market innovation to keep pace with other jurisdictions. The report points to automation, shorter settlement cycles, tokenisation and AI as reshaping market structure, while also flagging concentration, retail conduct, resilience and cyber risks. ASIC plans to publish the roundtable's practical themes and actions.
New Zealand Financial Markets Authority releases conduct report setting 2026 27 priorities and consumer credit transfer
The New Zealand Financial Markets Authority has released its second annual Financial Conduct Report, setting priorities for 2026/27 around remuneration conflicts, product design, complaints, and fraud prevention. It also highlights technology transformation and artificial intelligence as growing supervisory issues. From 1 July 2026, the authority will take on responsibility for consumer credit, bringing it under a single conduct regulator for financial services.
Bank for International Settlements warns of inflation, AI, fiscal and non-bank stability risks in Annual Economic Report 2026
The Bank for International Settlements' Annual Economic Report 2026 warns that the global economy faces renewed inflation risks, possible overextension in AI investment, persistent financial vulnerabilities and weak public finances. It says policy discipline across monetary, fiscal and financial stability frameworks is needed, with particular concern over the interaction between high sovereign debt and leveraged non-banks such as hedge funds.
OECD paper outlines four policy priorities to use AI and digital tools for SME sustainable finance
The OECD has published a paper on how AI and digital tools could improve SMEs' access to sustainable finance by reducing reporting, origination and monitoring frictions. It says progress depends on interoperable data infrastructure, stronger verification of sustainability data, clearer incentives for SME reporting and safeguards for AI use. The paper also stresses that more advanced AI applications should complement, not replace, human judgment.
European Central Bank analyses euro area current account surplus fall to 1.7 percent of GDP in 2025 amid US tariffs MNE flows and China competition
The European Central Bank said in an Economic Bulletin analysis that the euro area current account surplus fell to 1.7% of GDP in 2025 from 2.7% in 2024, driven mainly by wider services and primary income deficits rather than weaker goods trade. It linked the change chiefly to US tariffs and US multinational structures, stronger Chinese competition and rising AI-related digital imports and investment. The ECB expects the surplus to remain below its 2024 level, falling to about 1.3% of GDP in 2026 before recovering to around 1.5% by 2028.
Monetary Authority of Singapore to establish Future of Finance Institute focused on AI and tokenisation adoption
The Monetary Authority of Singapore will establish a Future of Finance Institute to speed industry adoption of AI and tokenisation. It will consolidate existing MAS-backed innovation efforts and provide shared resources through a knowledge hub, collaborative projects, sandboxes and implementation toolkits. More detail on its strategy and governance will be announced later this year.
European Central Bank Banking Supervision flags AI-driven cyber and concentration risks as a 2026-28 supervisory priority
In a letter to an MEP, European Central Bank Banking Supervision said AI-related cyber and operational risks are a supervisory priority for 2026-28 and warned that advanced AI could increase the likelihood of systemic cyber incidents. It is reviewing banks' AI use and controls, following up on weaknesses through supervision, and urging banks to test AI-driven cyber scenarios. The ECB also said it is monitoring wider financial stability risks from concentrated reliance on common AI tools and technology providers.
European Insurance and Occupational Pensions Authority financial stability report finds insurers and pension funds resilient despite geopolitical and market risks
The European Insurance and Occupational Pensions Authority's June 2026 Financial Stability Report says European insurers and occupational pension funds remained resilient despite geopolitical uncertainty and market volatility. Strong solvency and liquidity supported the sectors, but the report flags continuing vulnerabilities from financial market repricing, operational risks, claims inflation, sovereign and financial sector linkages, and private market exposures. It also highlights risks tied to artificial intelligence, less liquid assets and the Dutch pension transition.