BoE consults on AI discussion paper

The BoE is consulting on its discussion paper about how artificial intelligence (AI) may affect financial regulation. The discussion paper looks at how the current regulatory framework applies to AI; it considers how policy can both mitigate the associated risks of AI whilst also facilitating development and innovation.

The discussion paper follows the BoE’s second survey into the state of machine learning in the UK’s financial services, which reported that the number of UK financial services firms using machine learning (ML) is increasing.

72% of the firms that responded to the survey reported using or developing ML applications, but almost half of firms said that PRA and/or FCA regulations constrain ML deployment. Respondents to the survey do not see current uses of ML as high risk.

The BoE asks for feedback on the following areas:

  • the potential benefits and risks related to the use of AI in financial services;
  • how the current regulatory framework applies to AI;
  • whether additional clarification of existing regulation may be helpful; and
  • how policy can best support further safe and responsible AI adoption.

The consultation closes on 10 February 2023.

Nicola Radford