Wellington, May 5 (IANS) The Central Bank of New Zealand warned on Monday that the rise of Artificial Intelligence (AI) in the financial sector presents both opportunities and risks to financial stability.
In its upcoming Financial Stability Report, the Reserve Bank of New Zealand (RBNZ) cautions that increasing reliance on AI could amplify vulnerabilities, with risks including system errors, data privacy breaches and market distortions.
The growing dependence on a few major third-party AI providers raises concerns about market concentration, increasing the potential impact of cyberattacks, the report said.
As AI tools and models become increasingly sophisticated and widely integrated across the financial services sector, they offer significant potential benefits. These include improved productivity, greater modelling accuracy, enhanced risk assessment capabilities, and strengthened cyber resilience – helping financial institutions better detect and manage threats, the report detailed.
“Alongside these opportunities lie potential vulnerabilities. Errors in AI systems, data privacy concerns and market distortions could amplify existing risks. The growing reliance on a small number of third-party AI providers may also contribute to market concentration, creating new channels for contagion and increasing the potential impact of cyber-attacks.,” it said.
“There is still considerable uncertainty around how AI will shape the financial system,” said Kerry Watt, RBNZ Director of Financial Stability Assessment and Strategy. “While its impact could be positive, especially in enhancing resilience, it could also introduce or amplify vulnerabilities.”
The Central Bank highlights AI’s potential to boost productivity, enhance risk assessment, improve modelling accuracy, and strengthen cyber defenses across financial institutions, Xinhua news agency reported.
Regulated entities are expected to manage AI-related risks within existing frameworks, and regulations must evolve to keep pace with technological change, RBNZ said, adding it will continue monitoring AI developments and regulatory responses to ensure the financial system remains robust in the face of innovation.
–IANS
int/as
Disclaimer
The information contained in this website is for general information purposes only. The information is provided by TodayIndia.news and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.
Through this website you are able to link to other websites which are not under the control of TodayIndia.news We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, TodayIndia.news takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
For any legal details or query please visit original source link given with news or click on Go to Source.
Our translation service aims to offer the most accurate translation possible and we rarely experience any issues with news post. However, as the translation is carried out by third part tool there is a possibility for error to cause the occasional inaccuracy. We therefore require you to accept this disclaimer before confirming any translation news with us.
If you are not willing to accept this disclaimer then we recommend reading news post in its original language.
