Technology
By Evie Vavasseur
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Why Agentic AI Scares Regulators. Traditional oversight was built for a slower world. A compliance officer reviews a process.
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What Regulators Are Actually Considering. Several directions are on the table. AI-specific regulations are one path — rules written not for…
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The Innovation-Safety Tightrope. Nobody wants to kill the technology. That's worth saying clearly.
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Central bankers are rattled. Nikhil Rathi, CEO of the UK's financial watchdog, is pushing hard for new tools and a genuinely collaborative approach to deal with what he sees as a…
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The concern isn't abstract. AI systems in finance can now operate autonomously — making decisions, executing trades, managing risk — without a human in the loop.
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Traditional oversight was built for a slower world. A compliance officer reviews a process. An auditor checks the books. A regulator examines a firm's risk model.
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The complexity of these systems adds another layer. They're not transparent by default. You can't always open the hood and see why a decision was made.
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And it's not just a UK issue. Financial markets are global. AI developers are global. A risk that originates in one jurisdiction can ripple across borders in seconds.
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Several directions are on the table. AI-specific regulations are one path — rules written not for the financial products AI manages, but for the AI systems themselves.
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International collaboration is also a priority. The logic is straightforward: if AI and capital markets are both borderless, the regulatory response probably needs to be too.
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Related: FCAs Mills Review Puts 11 Million UK Adults at the Heart of AI Finance Shift
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There's also a push to build new monitoring tools. Not just rules on paper, but actual technical mechanisms that let regulators track AI activity in real time, flag anomalies,…
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Rathi's broader call is for regulators to stop sitting at a distance and start engaging directly with AI developers and financial institutions. That's a shift.
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Nobody wants to kill the technology. That's worth saying clearly. AI does bring real benefits to financial services — faster processing, better fraud detection, more efficient…
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But that balance is genuinely hard to strike. Regulate too loosely and you get systemic fragility. Regulate too tightly and you push innovation offshore or underground.
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