FSB outlines AI governance and stablecoin priorities for financial stability

The Financial Stability Board (FSB) has identified AI dependency, model governance, data quality, cyber risk, operational resilience and third-party providers as financial stability concerns, alongside three priorities for global stablecoins. FSB Secretary General John Schindler set out the agenda in a 21 October speech at RiskLive Asia 2026.

The FSB’s *Sound Practices for Responsible Adoption of AI* are described as a “flexible toolkit”, rather than minimum standards. They can be adapted to an institution’s size, business model and risk profile, and to the nature and scale of its AI adoption.

AI concentration is a stability risk

Schindler said AI is being adopted rapidly across banks and non-banks, with potential benefits including improved efficiency, risk assessment, customer service and access to financial products. The same adoption can introduce or amplify:

- dependency on a small number of third-party providers;
- weaknesses in model governance;
- poor data quality;
- cyber risks;
- operational vulnerabilities; and
- difficulty explaining or validating outputs.

These risks could become particularly significant when advanced or frontier models are used in critical financial processes. A disruption affecting one widely used provider or model could affect multiple institutions and jurisdictions at the same time.

The 12 sound practices address organisation-wide AI governance, lifecycle management, cyber-risk mitigation and third-party oversight. The FSB says they are intended to help financial institutions and authorities decide whether, how and at what scale AI should be adopted.

Atlas reads the approach as placing the control question above the technology question. The toolkit focuses on governance, lifecycle management, cyber-risk mitigation and oversight of third-party providers, with adaptation based on the nature and scale of adoption.

The speech gives no implementation deadline for the sound practices. It also recognises that AI capabilities, use cases and associated risks will continue to change, meaning the FSB intends to keep the issue under review.

Stablecoin oversight moves towards cross-border failure planning

Stablecoins remain used predominantly in cryptoasset markets, according to Schindler, but wider use for payments or as a store of value could have “vast implications” for the financial system. Their ability to cross borders can benefit holders while making it harder for one jurisdiction to assess or address vulnerabilities comprehensively.

National frameworks are developing at different speeds, and their interaction internationally can remain uncertain or undefined. The FSB is examining those cross-border vulnerabilities and the data required to monitor them, building on its 2023 high-level recommendations for global stablecoin arrangements and its 2025 implementation review.

The summary of that work submitted to the G20 in the week before the speech identified three areas for continued attention:

1. improving monitoring of cross-border vulnerabilities;
2. supporting implementation of the 2023 recommendations, particularly through international cooperation and information sharing; and
3. collecting information on emerging approaches to the distress or failure of global stablecoin arrangements, with particular attention to cross-border issues.

In Atlas’s view, the third priority is significant because it extends the discussion beyond authorisation and reserve controls. Authorities are also seeking to understand how a global arrangement could be managed if it encountered financial or operational distress across more than one jurisdiction.

Modernisation is tied to implementation

The FSB also published for consultation a report containing eight principles for modernising regulatory and supervisory frameworks. The principles are intended to keep regulation current, focus it on the most important risks and improve efficiency. They encourage proportionality, coordination between authorities, consultation and impact assessments.

Schindler expressly said modernisation is not equivalent to deregulation. In the FSB’s framing, regulatory change should preserve or enhance resilience while addressing new technologies, new forms of financial intermediation, changing market structures and lessons from past crises.

The speech paired that consultation with a warning about incomplete implementation of existing reforms. The FSB’s 2025 Interim Implementation Monitoring Review identified uneven implementation, while its peer review on temporary public sector funding for banks in resolution was sent to the G20 the previous week. Only one in five FSB member jurisdictions was fully compliant with the relevant policies, while approximately half had material gaps.

That finding gives the AI and stablecoin agenda a broader context. The FSB is asking authorities to update frameworks for structural change, but is also stressing that resilience depends on completing the frameworks already agreed. The eight modernisation principles are due to be finalised in 2027 after consultation and further engagement with stakeholders.