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Federal Reserve Speeches·

Bowman, Opening Remarks on Sound Practices for Artificial Intelligence

  • The Federal Reserve & FSB Secretariat seek public feedback on a consultation report regarding sound practices for the responsible adoption of artificial intelligence by financial institutions.
  • The final report is scheduled to be completed later this year as a U.S. G-20 deliverable.
  • The report was led by Hern Shin Ho of the Monetary Authority of Singapore with collaboration from U.S. Treasury & SEC colleagues.
  • The FSB Standing Committee on Supervisory & Regulatory Cooperation initiated this work to address rapidly evolving AI risks & benefits.
  • The Federal Reserve has monitored bank AI usage for nearly a decade, observing increased adoption across institutions of all sizes.
  • The report uses specific use cases & case studies to illustrate appropriate governance & controls, noting these are not the only methods for responsible AI use.
  • Financial institutions are urged to determine the materiality of their AI use to dictate the intensity of required governance & controls.
  • Lower-risk AI applications should receive a lighter supervisory & regulatory touch.
  • The report emphasizes proportionality, ensuring guidance is appropriate for smaller institutions with less complex AI uses compared to larger ones.
  • Stakeholders are encouraged to provide feedback on whether the practices are too prescriptive or fail to account for differences in institutional size, complexity, & risk profile.
  • The final report aims to support responsible innovation across the financial system while maintaining safeguards for higher-risk applications.
  • All views expressed are personal to the speaker & not necessarily those of the Federal Reserve Board or the Federal Open Market Committee.