Bowman: AI requires adaptable supervision, global coordination
Federal Reserve Vice Chair for Supervision Michelle W. Bowman discussed the rapid evolution of artificial intelligence in the financial system. She emphasized the need for adaptable supervisory guidance and international cooperation to manage its risks and benefits.
Navigating AI's dual impact
Michelle W. Bowman highlighted the rapid evolution of AI tools, citing examples like Anthropic's Mythos for identifying cyber vulnerabilities.
She noted AI's potential to enhance cybersecurity and improve efficiency across financial institutions of all sizes.
Bowman stressed that supervisors must ensure banks deploy AI responsibly, understanding its use cases for material tasks, employee accessibility, and direct consumer impact.
The Federal Reserve has shifted its supervisory focus to identifying and remediating material financial risk, adapting its guidance.
Recently, the Fed, OCC, and FDIC amended model risk management guidance to clarify it does not apply to generative or agentic AI, recognizing these novel technologies may require a different approach to foster innovation safely.
Global alignment on AI oversight
Bowman emphasized the importance of international engagement for the interconnected global financial system.
As chair of the Financial Stability Board's (FSB) Standing Committee on Supervisory and Regulatory Cooperation, she prioritizes identifying sound practices for AI adoption and innovation.
The FSB will publish a report for stakeholder comment, analyzing AI's benefits and challenges, including key principles.
Bowman expects the consultation draft in the third quarter of 2026, encouraging feedback to refine supervisory approaches and ensure international consistency in AI use expectations, especially for cybersecurity.