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FSB report examines market developments and their financial stability implications
Financial Stability Board report considers the financial stability implications of the growing use of artificial intelligence (AI) and machine learning in financial services. Identifies potential benefits and risks for financial stability that should be monitored, including: i) application of AI and machine learning by regulators and supervisors can help improve regulatory compliance and increase supervisory effectiveness; ii) applications of AI and machine learning could result in new and unexpected forms of interconnectedness between financial markets and institutions; iii) network effects and scalability of new technologies may give rise to third-party dependencies; iv) lack of interpretability or auditability of AI and machine learning methods could become a macro-level risk; and v) adequate testing and "training" of tools with unbiased data and feedback mechanisms is important to ensure applications do what they are intended to do.
Publisher:
Global Standard-Setting Bodies
Release date:
Nov 2017
Type:
Consultative, discussion and issues paper
Topics:
FinTech, Operational risk, Cyber risk, Conduct
Sectors:
Banking, Securities, Insurance
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