In a speech at a Cambridge University conference, Fernando Restoy, Chair of the Financial Stability Institute at the Bank for International Settlements, argued that supervisors must look beyond banks’ use of artificial intelligence and assess how AI-driven economic change affects their operational and strategic resilience. Prudential oversight should examine both the reduced time available to respond to AI-enabled cyber incidents and the longer-term effects on borrowers, credit portfolios and bank business models. Restoy called for model risk management guidance to be updated for advanced AI, including possible trade-offs between explainability and performance where risks are properly assessed and managed. He also urged supervisors to test banks’ incident response, service continuity and third-party recovery capabilities, while using forward-looking business model reviews, scenario analysis and horizon scanning to identify strategic vulnerabilities. Qualitative supervisory measures may be more effective than capital add-ons for firm-specific weaknesses, but supervisory judgment should operate within a transparent and consistent framework.
2026-09-18Bank for International Settlements
Bank for International Settlements’ Fernando Restoy calls for broader bank supervision covering AI governance and resilience
Fernando Restoy, Chair of the Bank for International Settlements’ Financial Stability Institute, called for bank supervision to extend beyond AI governance to operational and strategic resilience. Supervisors should update model risk management expectations, test faster cyber response and recovery, and assess how AI-driven economic change could affect borrowers, portfolios and bank business models.