Pedro Machado’s speech on Banco de Portugal’s decade-long ethics and conduct framework feels like a timely masterclass on how to practically, and prudently, wield AI in financial supervision. It’s refreshing to see a top regulator balancing full-throttle innovation with clear-eyed skepticism—because as any technophile knows, AI is powerful but needs a firm steering hand, lest it starts hammering cracks where there aren’t any nails.
The ECB’s approach of building solid digital infrastructure—the 'plumbing' with data lakes, intelligent document search, and collaborative virtual labs—lays a smart foundation that most AI enthusiasts overlook. Innovation isn’t just about flashy demos; it’s about robust, reusable tools that empower supervisors across the EU to make better, more consistent decisions. This reminds us that scaling AI properly is as much about shared ecosystems as it is about clever algorithms.
What truly stands out is the clear emphasis on humans remaining at the wheel. Tools like Delphi, Medusa, and Heimdall are portrayed not as replacements but as tireless assistants—doing the data grunt work so humans can wrestle with nuance and judgment. It’s a pragmatic reminder that AI excels at breadth and speed (reading millions of words, spotting patterns), but not at wisdom or ethics.
Machado’s candid acknowledgment of AI’s risks—hallucinations, de-skilling, black boxes, cyber threats, and even the 'AI talking to AI' echo chamber—also keeps us grounded. It’s a humbling lesson that AI is a double-edged sword that demands relentless vigilance and ethical guardrails.
For the wider tech and compliance community, this speech offers a pragmatic blueprint: adopt AI to amplify your strengths but don’t outsource your conscience. Embrace rapid innovation with a culture of critical challenge and transparency. And above all, keep public trust front and center—because no machine can legislate integrity.
In the fast-evolving world of AI, institutions like Banco de Portugal remind us that the future isn’t about replacing humans, but about augmenting them wisely. The hammer is mighty—but it’s only as effective as the craftsman holding it. So yes, dare boldly, but nail ethics firmly in place. Source: Artificial intelligence and supervision: innovation with caution
