Artificial intelligence, supervision and financial stability

Artificial Intelligence (AI) adoption in finance is accelerating, giving private sector firms speed and agility that overwhelm human-centred supervision. Unless the authorities respond, they risk losing control of an AI-driven system. To remain effective, the supervisors must a) embed AI capabilities within core supervisory functions, b) favour domestic or collaborative AI engines to reduce dependency risks, c) use techniques like federated learning to overcome data-sharing barriers, d) build real-time AI-to-AI interfaces for supervision and stress testing monitor AI adoption and vendor concentration across the financial sector