The Reserve Bank of New Zealand published a special topic in its May 2025 Financial Stability Report assessing how accelerating adoption of artificial intelligence in financial services could affect financial stability, highlighting both efficiency gains and new vulnerabilities. Regulated entities are expected to understand and manage AI-related risks within their existing obligations, while regulatory frameworks are noted as needing to keep pace with technological change. Potential benefits cited include higher productivity, improved modelling accuracy, stronger risk assessment and enhanced cyber resilience. The Reserve Bank also pointed to risks from AI errors, data privacy issues and market distortions, and warned that growing dependence on a small number of third-party AI providers could increase market concentration, create new channels for contagion and raise the potential impact of cyber-attacks. The Reserve Bank said it will continue to monitor AI technology developments, adoption trends and the evolving regulatory landscape.

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