Central Bank highlights AI risks and innovation gains
The Central Bank of Ireland convened its fifth annual Financial Systems Conference, focusing on technological innovation and financial stability. Governor Gabriel Makhlouf emphasised AI’s transformative potential alongside the need for vigilance amid evolving market risks in Dublin.
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Central Bank of Ireland
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⏱️ 2 min read
The Central Bank of Ireland hosted its fifth annual Financial Systems Conference on Monday, 2 November, at Croke Park, Dublin, drawing approximately 500 delegates, including international and domestic policy experts and senior financial services figures. The event explored critical topics such as geopolitical shifts, European financial market integration, Central Bank Digital Currencies, and resilience amid digital transformation.
Governor Gabriel Makhlouf addressed the rapid technological changes impacting the economy and financial system, particularly the influence of artificial intelligence (AI). He highlighted AI’s effects on economic growth, labour markets, and productivity while warning of financial stability risks due to stretched valuations linked to AI-driven investments. Makhlouf noted the historical precedent for market corrections during infrastructure booms and stressed the importance of vigilance given the significant scale and financing complexities involved.
The Governor confirmed that most Central Bank-regulated firms already utilise AI technologies and outlined supervisory expectations regarding governance and accountability. He introduced the Central Bank’s third Innovation Sandbox Programme themed “Advancing AI for Consumer Good,” opening for applications in January 2027. On tokenisation and distributed ledger technology, Makhlouf acknowledged their potential to enhance financial market efficiency and product innovation but emphasised the need for systemic evolution. The Central Bank recently published a feedback statement on tokenisation, setting priorities including collaboration with the Eurosystem and supporting legal clarity initiatives under the Ireland for Finance Strategy – Vision 2030. Planned enhancements include a tokenised access point via the Innovation Hub and an innovation insights model focused on tokenisation. Concluding, the Governor affirmed the Bank’s commitment to adapting regulatory frameworks to foster innovation while managing associated risks.
Governor Gabriel Makhlouf addressed the rapid technological changes impacting the economy and financial system, particularly the influence of artificial intelligence (AI). He highlighted AI’s effects on economic growth, labour markets, and productivity while warning of financial stability risks due to stretched valuations linked to AI-driven investments. Makhlouf noted the historical precedent for market corrections during infrastructure booms and stressed the importance of vigilance given the significant scale and financing complexities involved.
The Governor confirmed that most Central Bank-regulated firms already utilise AI technologies and outlined supervisory expectations regarding governance and accountability. He introduced the Central Bank’s third Innovation Sandbox Programme themed “Advancing AI for Consumer Good,” opening for applications in January 2027. On tokenisation and distributed ledger technology, Makhlouf acknowledged their potential to enhance financial market efficiency and product innovation but emphasised the need for systemic evolution. The Central Bank recently published a feedback statement on tokenisation, setting priorities including collaboration with the Eurosystem and supporting legal clarity initiatives under the Ireland for Finance Strategy – Vision 2030. Planned enhancements include a tokenised access point via the Innovation Hub and an innovation insights model focused on tokenisation. Concluding, the Governor affirmed the Bank’s commitment to adapting regulatory frameworks to foster innovation while managing associated risks.
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