Bowman, Opening Remarks on Sound Practices for Artificial Intelligence
SPEECH DIGEST
NEUTRAL high confidence · 4.6k characters readBowman opening remarks on the FSB consultation report on responsible AI adoption in finance. Entirely regulatory/supervisory: use-case materiality, proportionality, lighter touch for lower-risk AI uses, final report due later this year as a U.S. G-20 deliverable. Zero monetary policy content.
What’s new: Nothing material for rates. The only incremental content is Bowman's framing that lower-risk AI uses should get a lighter supervisory and regulatory touch and her explicit request for feedback on proportionality for smaller banks: consistent with her established deregulatory-leaning Vice Chair for Supervision posture. No signal on the funds rate, inflation, or labor.
KEY FINDINGS
- Bowman says the report emphasizes that lower-risk uses of AI should receive a lighter supervisory and regulatory touch. Marginally supportive for bank compliance costs and confirms the light-touch supervisory direction under Bowman, but no rates read.
- The FSB report is a consultation and will be finalized later this year as a U.S. G-20 deliverable. Timeline only: no binding requirements on institutions today.
- She invites comment on whether the report is too prescriptive and whether proportionality across institution size is right. Signals the final version is likely to soften rather than tighten, a small positive for smaller and regional banks.
- No mention of the policy rate, inflation, the labor market, or the balance sheet anywhere in the remarks. Do not trade this: it settles nothing on the December or January path.
FROM THE DOCUMENT
In the report, we emphasized that lower-risk uses of AI should receive a lighter supervisory and regulatory touch.
As you provide feedback, I encourage you to identify areas where the sound practices may be too prescriptive or where they fail to adequately account for differences in institutional size, complexity, and risk profile.
Similarly, the report also includes a significant focus on proportionality.
Speech At the Financial Stability Board Virtual Outreach Event
Thank you for the opportunity to join you today to discuss the Financial Stability Board's (FSB) consultation report on Sound Practices for Responsible Adoption of Artificial Intelligence. 1 Both Federal Reserve staff and staff from the FSB Secretariat are eager to consider and incorporate feedback on the consultation report so that we can finalize the report later this year as a U.S. G-20 deliverable. Before offering a few thoughts about the report itself, I want to thank Hern Shin Ho from the Monetary Authority of Singapore. Hern Shin led the FSB work stream that produced this report in a very compressed timeframe, and I would also like to recognize and thank the FSB Secretariat staff who supported this work. Finally, I would like to thank our U.S. colleagues at the Treasury and the SEC who also collaborated with us to produce this report.