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
Central Bank of Russia publishes first AI information security recommendations for financial institutions
The Central Bank of Russia has issued its first recommendations on information security for financial institutions using AI. The guidance maps AI-related risks and cyberattack tactics and recommends human confirmation where AI is used in high-risk critical processes such as payment transactions. It also calls for internal AI threat models and security policies and highlights vendor security practices, including bug bounty participation.
European Central Bank publishes working paper finding firms react to domestic but not foreign peer AI investment
The European Central Bank has published a working paper, representing the authors’ views, finding that firms underestimate peers’ AI investment and increase their own planned AI spending when given accurate information. The effect is driven by domestic peers, with a 1 percentage point rise in expected domestic peer adoption increasing a firm’s own expected AI investment rate by 0.570 percentage points, while foreign peer effects were not statistically significant. Treated firms planned to allocate 10.13% of investment to AI versus 8.33% in the control group.
Hong Kong Mandatory Provident Fund Schemes Authority launches AI chatbot for personalized MPF investment education
The Hong Kong Mandatory Provident Fund Schemes Authority has launched an AI chatbot on its MPF investment education website to give scheme members real-time, personalized information based on official MPFA resources. The tool explains MPF investment concepts, provides source references and visual aids, and suggests related questions. It does not provide investment advice, recommend funds, or assess suitability, and will later be extended to other education tools including the retirement planning mobile app.
Belgium Financial Services and Markets Authority warns frontier AI heightens cyber risk and tells DORA firms to strengthen controls
The Belgium Financial Services and Markets Authority has warned that frontier AI systems are making cyberattacks easier, faster and more scalable, requiring regulated firms to reassess ICT risk even if they were previously seen as lower-risk targets. It says DORA provides the core response framework and expects in-scope firms to strengthen asset inventories, patching, detection and incident response, and oversight of ICT service providers. The guidance is also recommended for firms outside DORA's scope.
Canadian Securities Administrators warn of rising fraud risks for older investors and urge use of trusted contacts
The Canadian Securities Administrators warned that older investors are increasingly exposed to fraud and financial abuse as digital platforms and AI make scams look more legitimate. It urged investors to verify registration, be wary of unsolicited and crypto-related offers, and avoid relying on apparent endorsements from public figures. The CSA also reminded investors to name a Trusted Contact Person on investment accounts as a safeguard against suspected abuse or exploitation.
Hong Kong Insurance Authority adds three insurers to AI Cohort Programme taking core participants to 10
The Hong Kong Insurance Authority added three insurers to its AI Cohort Programme, taking the number of core participants to 10 since August 2025. At the AI Cohort Symposium, participating insurers outlined plans for AI centres of excellence, talent development and deployment of AI tools. The authority also highlighted stronger governance of AI use cases and broader support from Hong Kong's AI and insurtech ecosystem.
Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan publishes first supervisory assessment finding banks model risk management remains at a formative stage
Kazakhstan’s Agency for Regulation and Development of the Financial Market published the results of its first supervisory assessment of model risk management at second-tier banks. It found the frameworks are still being built and need stronger governance, independent control and validation. The report also sets supervisory expectations for traditional, machine learning and artificial intelligence based models.
Dutch Authority for the Financial Markets says AI Act implementing bill is workable but seeks changes to supervisory split and oversight conditions
The Dutch Authority for the Financial Markets said the Dutch AI Act implementing bill is workable in principle but needs changes to support effective supervision in finance. It flagged the proposed division of responsibilities with DNB, and said effective oversight will require clear powers, data-sharing arrangements, publication rules and sufficient capacity. The authority also said both supervisors should oversee prohibited AI uses and high-risk applications within their respective mandates.
U.S. Senate Committee on Banking, Housing and Urban Affairs ranking member calls for markup of AI chip export legislation
The U.S. Senate Banking Committee published hearing remarks in which Ranking Member Elizabeth Warren called for markup this month of bipartisan bills to restrict advanced AI chip flows to China. She also warned that heavily debt-financed AI infrastructure spending could create financial stability risks through private credit funds and banks if AI companies cannot meet their obligations.
U.S. Senate Committee on Banking, Housing and Urban Affairs holds hearing on AI benefits risks and competition with China
The U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on AI's implications for the economy, financial services, consumers and U.S. competition with China. In opening remarks, Chairman Tim Scott urged a measured approach that addresses major risks without impeding lending, credit access or startup growth. He also pointed to AI's potential to cut costs, speed services, improve fraud detection and reshape work, with worker training and export controls part of the policy debate.
South African Reserve Bank flags higher financial stability vulnerabilities from Middle East conflict and frontier AI while finding system resilient
The South African Reserve Bank’s first 2026 Financial Stability Review finds that residual vulnerability in South Africa’s financial system has increased since November 2025, driven mainly by the escalation of the Middle East conflict and rapid advances in frontier artificial intelligence. The review highlights heightened risks from volatile capital flows, fiscal stress, household distress and operational disruption, alongside persistent structural and climate-related vulnerabilities. Systemically important institutions remain well capitalised and liquid, and the Bank plans to provide deposit facilities to central counterparties by end-2026 and to finalise indicators for a positive cycle-neutral countercyclical capital buffer in 2027.
Financial Stability Board consults on 12 sound practices for responsible AI adoption by financial institutions
The Financial Stability Board has issued a consultation report proposing 12 non-binding sound practices to support responsible adoption of artificial intelligence by financial institutions, framed as a toolkit for boards and senior management rather than a new standard. The practices address organisation-wide AI governance, risk management across AI development and deployment, and AI-related cyber, ICT, and third-party risks, and are designed to align with existing FSB and standard-setting body work and support cross-border coordination.
Bank of Korea publishes study finding AI cut work time by 3.8 percent but did not raise realized productivity
The Bank of Korea published a study finding that generative AI reduced average work time by 3.8%, or about 1.5 hours a week, implying a potential productivity gain of about 1.0%. Those time savings, however, showed essentially no relationship with actual output growth, suggesting AI efficiency gains have not yet been converted into realized productivity. The note links the gap to limited workflow redesign and incentives, with stronger output effects only among groups such as the self-employed, professionals and intensive AI users.
Dutch Authority for the Financial Markets warns advanced AI is shortening time to exploit vulnerabilities and urges stronger baseline security
The Dutch Authority for the Financial Markets warns that advanced artificial intelligence models are accelerating and sophisticating cyberattack chains, shortening the window for firms to detect and remediate vulnerabilities. It urges firms, particularly medium-sized and smaller entities with less mature security or older systems, to strengthen baseline security, patching, monitoring and incident response, including anomaly detection, logging of administrative actions and alerts for high-risk events. The authority also notes that firms can deploy artificial intelligence defensively to identify and fix vulnerabilities more quickly.
HM Treasury publishes sector AI adoption plans and launches AI Growth Lab and AI Economics Institute
HM Treasury shifted from strategy to implementation on AI adoption, confirming sector AI adoption plans, an advisory AI Growth Lab, and a joint AI Economics Institute with the Department for Science, Innovation and Technology to address data access, regulatory uncertainty, commercialisation and compute constraints. The AI Growth Lab will initially focus on legal services, while the AI Economics Institute will study AI’s impact on productivity, labour markets and growth. Reeves also outlined forthcoming legislation to enable testing of currently prohibited innovations, a Financial Services AI Adoption Plan, a new national supercomputer in Edinburgh and a National Cyber Action Plan.
French Financial Markets Authority to review how listed company boards address AI cybersecurity and geopolitical risks in 2026 governance report
The French Financial Markets Authority will use its 2026 annual report on corporate governance and executive pay to review how boards at listed companies integrate artificial intelligence, cybersecurity and geopolitical risks into governance, risk management and disclosures, and may issue related recommendations. It will also contribute in 2026 to OECD Corporate Governance Committee work on AI and governance, including boards’ use of AI, governance changes, transparency of board responsibilities, shareholder dialogue and investors’ roles.
HM Treasury publishes initial AI Economics Institute prospectus focused on AI economic evidence and scenario modelling
HM Treasury has published the initial prospectus for the AI Economics Institute, a joint research organisation with the Department for Science, Innovation and Technology, setting out its first research agenda on AI’s economic effects. The institute will build an evidence base on AI’s impact on productivity, labour markets, firms, trade and competitiveness, and develop models linking AI adoption paths to economy-wide outcomes to inform policy decisions under uncertainty. It will collaborate with government, academia, business and civil society, may publish selected analysis, and will not set policy, with its outlook intended to evolve as AI and related policy questions develop.
UK Financial Conduct Authority launches AI Input Zone survey and says it will not introduce new AI specific rules
The Financial Conduct Authority set out its approach to artificial intelligence in financial services, confirming it will not introduce AI-specific rules and will instead apply existing frameworks such as the Consumer Duty, the Senior Managers and Certification Regime, and governance and controls expectations. It launched an AI Input Zone survey under its AI Lab to collect evidence on AI use cases, barriers, areas needing further clarity and emerging risks, and plans to publish examples of good and poor practice in 2026, alongside ongoing Supercharged Sandbox and AI Live Testing initiatives and the forthcoming Mills Review on the long-term impact of AI.
French Financial Markets Authority publishes research finding artificial intelligence remains a minority investment information source but is used five times more by younger investors
The French Financial Markets Authority published a special edition of its savings and investment barometer on artificial intelligence, finding that 11 percent of French respondents use AI before investing, compared with 42 percent who rely on a bank or financial adviser, with higher use among younger, more educated and risk-tolerant investors. AI is mainly used alongside other sources, and while respondents see potential benefits such as more tailored advice and better performance or lower fees, many fear errors, poor decisions and less transparent investments.
European Central Bank Banking Supervision outlines amplified risks for financial conglomerates and calls for simpler EU banking rules
The European Central Bank Banking Supervision warned that financial conglomerates face heightened contagion across banking and insurance, driven by shared ICT infrastructure, cyber and AI risks, and exposures to non-bank financial institutions. Anneli Tuominen highlighted stricter EU rules under the Artificial Intelligence Act and Digital Operational Resilience Act and called for stronger board ICT expertise, risk management, cyber resilience, third-party oversight and crisis communication. She said the ECB will present a reverse stress test on geopolitical risks later this year and has urged the European Commission to complete banking union, simplify capital buffers and reporting, and tighten oversight of large non-bank groups.
Australian Prudential Regulation Authority details intensified AI cyber and private credit supervision and action against five super trustees
The Australian Prudential Regulation Authority told a parliamentary committee the financial system remains resilient but faces a more volatile risk environment, and it is intensifying supervision of AI governance, cyber resilience, supplier concentration and private credit spillover risks. It cited higher capital overlays, licence conditions on several entities, a Financial Accountability Regime disqualification, and enforcement against five platform trustees for investment governance failings, while leaving macroprudential settings unchanged. APRA plans further remediation and possible prudential changes for platform trustees, is finalising a supervisory plan for AI risks, and will publish Phase 2 system stress test findings in mid-2026, followed by results of a joint bank stress test with the Reserve Bank of New Zealand.
Japan Financial Services Agency reports Anthropic Project Glasswing access for Japan and some financial institutions
The Japan Financial Services Agency reported that Finance Minister Katayama confirmed Japan, including some financial institutions, has joined Anthropic’s Project Glasswing under an understanding with the U.S. Treasury, gaining access to the Claude Mythos Preview frontier AI model for cybersecurity work. Access rights are now available and preparations are largely complete, with the initiative aimed at strengthening cyber defences against cross-border economic crime, fraud and money laundering and informing broader defensive methods.
Malta Financial Services Authority sets AI governance and prudential expectations for supervised licence holders
The Malta Financial Services Authority has issued a Dear CEO letter setting supervisory expectations for AI adoption by all MFSA‑supervised licence holders, treating AI as a prudentially relevant risk to be embedded in governance, risk management and internal control frameworks in line with the evolving EU Artificial Intelligence Act. The letter stresses board and senior management accountability, governance and oversight of AI systems, third‑party and concentration risk, model validation and monitoring, data governance, regulatory compliance and operational resilience, and introduces a self‑assessment framework that firms must complete and have reviewed at board level. AI will remain a focus of supervision, including thematic work and onsite inspections, with particular attention to governance, outsourcing, customer‑facing use cases and alignment with risk appetite.
State Bank of Vietnam issues banking sector plan supporting private enterprise with goal of three state-owned commercial banks in Asia top 100 by 2030
The State Bank of Vietnam has issued a sector-wide plan to shift banking supervision toward development-oriented regulation, improve credit institutions and foreign bank branches, and expand access to modern financial services, especially for private firms. The plan prioritises regulatory review, monetary, credit, foreign exchange and payments management, supervision, bad debt resolution, restructuring, digital infrastructure and cybersecurity, and promotes digital and green transition, artificial intelligence, stronger governance and risk management, and simplified, digitalised credit processes. It also targets, by 2030, at least three state-owned commercial banks among Asia’s 100 largest by assets and four state-owned banks as leading institutions in technology, governance, scale, market share and market-regulating capacity.
Financial Stability Board Europe consultative group meets in Vienna to review 2026 work programme and financial stability risks
The Financial Stability Board’s Regional Consultative Group for Europe met in Vienna to review the FSB’s 2026 work programme, assess global and regional financial vulnerabilities, and discuss the financial stability implications of advanced AI models and system-wide exploratory stress testing. Members also held a roundtable on private credit, focusing on its growth in Europe, liquidity risks, and vulnerabilities arising from retail investor participation in private credit funds.