FSB report highlights AI’s financial stability implications and data challenges
The Financial Stability Board (FSB) has released a new report assessing the implications of artificial intelligence (AI) for the financial sector.
Building on its 2017 study, the report, published on 14 November 2024, examines advances in AI adoption, its benefits, and the vulnerabilities it introduces to financial stability.
AI clearly a significant driver in transforming finance, with firms using it in a wide range of projects, including those enabling enhanced analytics, regulatory compliance, and customisation of financial products. Recent developments, including generative AI and large language models, have expanded its use cases. However, the report cautions that AI adoption could also heighten systemic risks through third-party dependencies, cyber vulnerabilities, market correlations, and data-quality issues. Generative AI introduces additional risks, such as a new vector for and potential scale for financial fraud and disinformation, that demand close monitoring.
One critical theme is the importance of data quality and transparency. Poorly governed or misaligned AI systems can amplify errors, distort markets, or behave unpredictably, undermining financial stability. The FSB recommends that authorities strengthen data governance, assess regulatory frameworks, and invest in supervisory tools, including AI-powered technologies.
This is not the first time we’ve tackled the topic of AI at XBRL International. You already know our stance: AI is a remarkable tool, but it cannot replace structured, high-quality data. AI’s true potential only emerges when underpinned by transparency and reliable data. Poorly governed AI amplifies risks; structured data reduces them. Without it, AI’s promises falter under the weight of its vulnerabilities.
The FSB’s call for better governance aligns with our mission to promote data quality as the bedrock of financial systems.
Dive deeper into the FSB’s findings here.
