by Maria Lucia Passador*
ABSTRACT
The EU Artificial Intelligence Act (AI Act) is a landmark piece of legislation designed to regulate AI systems according to their risk levels and ensure the protection of fundamental rights. This paper focuses on the interplay between the AI Act and prudential supervision within the EU banking sector, with a particular focus on the role of the European Central Bank (ECB).
The study delves into the legal framework underpinning the ECB’s supervisory responsibilities, and prudential tasks, also examining the AI governance, as well as the collaborative dynamics between the ECB, the AI Office, and the European AI Board. It underscores the importance of coordination in implementing AI governance frameworks, participating in regulatory sandboxes, and conducting real-world testing of high-risk AI systems.
The challenges and opportunities arising from the integration of AI into banking supervision are critically analyzed. The paper advocates for a unified supervisory approach that balances the innovative potential of AI with prudential requirements, ensuring that ethical standards and financial stability are upheld.
This study contributes to the academic and regulatory discourse by providing insights into the evolving legal landscape governing AI in finance. It offers strategic policy recommendations to enhance the ECB’s oversight capabilities, facilitating the responsible integration of AI technologies while safeguarding the integrity of the financial system, proposing a pathway towards a more cohesive and effective regulatory framework for AI applications in the banking sector.
* Maria Lucia Passador, LL.M. (Harvard), Ph.D. (Bocconi). Assistant Professor of Corporate Law and Financial Markets Regulation, Bocconi University, Milan; Visiting Professor of Comparative Corporate Law, Notre Dame Law School; Associated Researcher, European Banking Institute; Research Fellow, Baffi Centre on Economics, Finance and Regulation; Research Associate of the University College London Centre for Blockchain Technologies.
Published in CJEL Vol. 30 issue 2.
Read the full article on HeinOnline, Lexis, or Westlaw. Interested in receiving the Columbia Journal of European Law in print at your university or office? Please contact our Executive Editor at ee.cjel@law.columbia.edu.
Also published in Vol. 30 issue 2:
Exceptionalism in European Union Law: A Community for Outsiders?, by Tamas Dezso Ziegler, Balázs Horváthy, & Thomas Buijnink
The Enduring Battle Between the Lex Sportiva and EU Competition Law, by Ilias Bantekas
Dignity and Degrading Treatment at the European Court of Human Rights, by Helen Jennings
