Global financial regulators are launching a coordinated effort to monitor the risks emerging from banks’ rapid adoption of artificial intelligence. The Financial Stability Board (FSB), the G20’s risk watchdog, warned that widespread reliance on identical AI models and specialized hardware could trigger herd‑like behavior, creating vulnerabilities if alternatives are scarce. Regulators are especially concerned about the potential for AI to amplify market stress, though they acknowledge there is currently little empirical evidence linking AI‑driven correlations to actual market outcomes .
A parallel study by the Bank for International Settlements (BIS) emphasized an “urgent need” for central banks and financial supervisors to upgrade their capabilities. The BIS urged authorities to become both informed observers of AI’s impact and active users of the technology, highlighting the importance of building robust internal expertise to keep pace with rapid innovation .
Beyond systemic risk, regulators flagged heightened exposure to AI‑related cyberattacks and fraud, underscoring the need for tighter operational resilience. The European Union has already taken a lead with its Digital Operational Resilience Act (DORA), which came into force in January, setting a baseline for how financial firms should manage technology‑driven risks .
Overall, the coordinated push aims to balance the productivity gains banks expect from AI with safeguards against concentration, cyber threats, and potential market instability. By ramping up monitoring and encouraging capability upgrades, global watchdogs hope to steer the financial sector toward a more resilient and transparent AI future .
