First, regulators around the world have issued regulations or guidance on the management of outsourcing risks pertaining to cloud services. The Monetary Authority of Singapore and the UK Financial Conduct Authority were among the first regulators to do so, as early as 2013. Second, the jurisdictions where these CSPs operate from have begun to exercise regulatory oversight over them. In the US, the Cloud Services Utility Agency, or CSUA, was formed in 2024 with the mandate of regulating CSPs, working closely with the US Federal Reserve System. I am pleased that the Federal Reserve Bank of San Francisco has been designated as the lead regulatory co-ordinator with the CSUA, as two of the four globally dominant CSPs are based in California. Dealing with artificial intelligence The use of AI has swept across the financial services sector in recent years. Banks are benefitting from AI through better customer insights, increased productivity, and cost savings. AI applications range from customised financial services to enhanced risk management and regulatory compliance. But the growing application of AI has also introduced new risks and challenges for regulators. Foremost are concerns about market disruption and financial instability caused by runaway AI trading algorithms. The global flash crash of August 2022 demonstrated the contagion risks that multiple AI trading programmes “learning” from one another can precipitate.
I simply do not believe that the alternative approaches are sufficiently credible. 4  BIS central bankers’ speeches