Financial regulators have found no measurable evidence that artificial intelligence (AI) currently poses a systemic risk to Barbados’ financial system, but they are urging closer monitoring of how the technology is being used across the sector.
The Central Bank of Barbados (CBB) in its report “Artificial Intelligence and Financial Stability in Barbados” said its assessment was based on available evidence and international research.
“The Bank reached this view in an assessment published alongside the 2025 Financial Stability Report, drawing on a review of the international evidence,” the CBB said.
The report, which was prepared jointly with the Financial Services Commission (FSC), identified cyber and AI-related risks among the developments being closely monitored by regulators.
“Sound governance,” the report cautioned, “will determine whether the benefits outweigh the risks. Institutions adopting AI require clear accountability for their models, human oversight of material decisions, strong cybersecurity and prudent management of their dependence on outside providers, with customer protection at the centre.”
The report also noted that the Financial Stability Board (FSB) has encouraged authorities to close gaps in data on how institutions use AI.
“The Bank, working with the Financial Services Commission, will continue to monitor the use of AI across the financial system and to strengthen its supervisory capacity,” the regulator said.
The Bank acknowledged that AI is reshaping the global financial sector, with institutions increasingly using the technology for credit assessment, fraud detection, customer service, risk management and operational efficiency.
However, it warned that greater adoption also raises concerns about cybersecurity, model governance, reliance on outside providers and the resilience of the wider financial system.
The Central Bank said AI also has the potential to strengthen financial stability.
“Better analytical tools can sharpen credit decisions, detect fraudulent transactions sooner and improve early-warning systems. Financial institutions can use regulatory technology (RegTech) to support compliance, while supervisors can apply supervisory technology (SupTech) to strengthen financial sector monitoring,” the report said.
At the same time, the bank warned that the risks are significant.
“Opaque models, biased algorithms, inaccurate outputs and weak human oversight can create new vulnerabilities. Generative AI can make phishing, fraud and misinformation more sophisticated. Because many institutions rely on a small number of AI and cloud providers, a single disruption could affect several institutions at once,” the report stated.
The regulator said AI could affect Barbados through financial institutions, households, businesses and external linkages.
“Financial institutions gain efficiency and better fraud detection but face operational, cyber and concentration risks. Households and non-financial firms could benefit from higher productivity and easier access to financial services, although labour displacement could weaken incomes, deposits and repayment capacity.”
The report also warned that shocks originating outside Barbados could have domestic consequences.
“Disruptions in international and source markets could reach Barbados through financial conditions, trade and capital flows, and cyber threats cross borders easily. Regulatory authorities must monitor these emerging exposures while assessing opportunities to use AI in their own supervisory work.”
(EJ)
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