The Japan Financial Services Agency (FSA) has published version 1.1 of its AI Discussion Paper, setting out the current state of artificial intelligence use in financial institutions and summarising initial issues identified for promoting sound utilization. The update builds on the AI Discussion Paper (version 1.0) released in March 2025 and incorporates additional content reflecting knowledge gained through the FSA’s AI Public-Private Forum held from June to December 2025, which covered AI adoption, examples of AI-related risk management and governance, and areas where the application of regulations may need clarification. The FSA notes the analysis remains at an early stage and that the issues identified may change significantly with technological innovation and shifts in the business environment. Alongside the paper’s full text, a marked-up version showing changes from version 1.0 and summary materials, the FSA has invited comments and suggestions and indicated it will continue dialogue with stakeholders while further considering specific measures.