AI is outpacing the rules, Europe’s top bankers and regulators warn

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European policymakers are struggling to keep up with rapid advancements in artificial intelligence (AI) as they try to support adoption while mitigating risks to market stability.
Nikhil Rathi, CEO of the U.K.’s Financial Conduct Authority, argues that traditional rulemaking is insufficient to manage the pace of technological change in AI.
Efforts are underway in the U.K., such as the creation of the AI Safety Institute, to help regulators and businesses understand and safely adopt AI.
Christine Lagarde, president of the European Central Bank, sees AI as a source of productivity gains but also warns of its major risks, especially concerning the rapid development of AI models.
Agentic AI’s potential to amplify volatility during market stress has been highlighted by Sarah Breeden, deputy governor of the Bank of England, prompting discussions on increased oversight and potential market controls.
Top bankers and regulators acknowledge that Europe is lagging in both AI investment and the development of leading companies, prompting a call for Europe to build its own AI capabilities.
Regulators emphasize the need to balance the rapid pace of AI innovation with the necessary safeguards to not expose markets to unmanageable risks.
A collaborative approach is needed to address financial crimes and AI-related risks, with an emphasis on transparency regarding where such risks may lie.

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