As part of their daily governance, banks need to consider the risks associated with using artificial intelligence (AI) and machine learning (ML), according to a senior global banking regulator on Wednesday.
Pablo Hernandez de Cos, the governor of the Bank of Spain and chair of the worldwide Basel Committee on Banking Supervision stated that there are still unsolved problems regarding the impact of AI and ML in banking on global financial stability.
During a speech in Washington, de Cos stated, “My main message is that the use of AI in banking raises important prudential and financial stability challenges.”
Laptops 1000“Left unchecked, such models could potentially amplify future banking crises.”
According to de Cos, digital innovation will intensify cross-border and cross-sectorial financial interconnections, necessitating cooperation between regulators and central banks to provide a suitable regulatory framework for regulating AI and ML.
“When it comes to banking, it is critical that banks anticipate and oversee the risks and challenges posed by AI/ML – both at the micro and the macro level – and incorporate them in their day-to-day risk management and governance arrangements,” de Cos stated.
He stated that the Basel Committee will soon release a more thorough report on the digitization of finance and its effects on oversight and regulation.
