The Reserve Bank of New Zealand believes that the application of artificial intelligence poses risks to financial stability.

The Reserve Bank of New Zealand stated in a report on Monday that the rapid application of artificial intelligence in the financial services sector poses risks to financial stability. "Errors in AI systems, data privacy issues, and market distortions could amplify existing risks," the report said. "Growing reliance on a small number of third-party AI providers may also lead to market concentration, create new transmission channels, and increase the potential impact of cyber attacks." However, the report also added that AI tools and models bring benefits, including increased productivity, improved modeling accuracy, strengthened risk assessment capabilities, and enhanced network resilience. The Reserve Bank of New Zealand will release its semi-annual Financial Stability Report on Wednesday.