The Bank of England's chief banking supervisor said U.K. banks have begun scaling back their exposure to artificial intelligence as market worries mount over a sharp correction in the sector.
Katharine Braddick, who took the helm of the Prudential Regulation Authority in July, said in her first interview since assuming the role that the central bank's sweeping review of lenders' AI exposure did not show they would act as an "amplifier" of any AI shock.
Even so, the central bank is not complacent. "We're all worried now, aren't we?" she said.
That said, the Bank of England currently has no plans to use capital rules to encourage banks to reduce their risk exposure. Turning to the signs of retrenchment seen recently, she said banks are "all asking themselves the question" of whether exposure should be cut.
"I can see institutions reviewing their risk appetite, weighing it again and again: 'This client is fine, that client isn't,'" she said. "That effect really is feeding through."
Comments