Financial Stability Board reviews innovation risks and urges action on bank resolution funding gaps

In remarks on innovation and resilience, the Financial Stability Board’s (FSB) Secretary General reviewed recent work on artificial intelligence, global stablecoins and regulatory modernisation, while urging jurisdictions to close gaps in reforms adopted after the financial crisis. The central message was that adapting regulation to technological change must preserve resilience rather than amount to deregulation. The remarks follow the FSB’s recent submissions to the Group of Twenty and its consultation on eight principles for modernising regulation and supervision, which are due to be finalised in 2027. For financial institutions, the recently published 12 sound practices for responsible adoption of artificial intelligence provide a flexible toolkit rather than minimum standards. They address governance, management throughout the AI lifecycle, cyber risks and oversight of external providers. Dependence on a small number of providers or widely used models could transmit disruptions across institutions and jurisdictions. For global stablecoins, uneven national frameworks and uncertain interactions between them reinforce the need for international cooperation. Ongoing work focuses on monitoring vulnerabilities across borders, implementing the FSB’s 2023 recommendations and gathering information on planning for distress or failure. The remarks also highlighted incomplete implementation of policies on temporary public sector funding for banks in resolution. A recent peer review found that only one in five FSB member jurisdictions is fully compliant, while approximately half have material gaps. These shortcomings limit authorities’ ability to resolve systemic banks and could affect financial stability during stress. Separately, the 2026 Implementation Monitoring Review identifies ways to make FSB policy development more targeted, better calibrated and more responsive to implementation challenges.