The adoption of artificial intelligence in the financial sector presents significant opportunities for efficiency and value creation, but it also introduces potential risks that must be addressed.
On 22 May 2024, the Organisation for Economic Co-operation and Development (OECD) and the Financial Stability Board (FSB) held a roundtable with experts from the public and private sectors and with academics to analyse trends and use cases of artificial intelligence (AI) in finance. Roundtable participants discussed opportunities and risks and shared emerging best practices regarding policy frameworks.
The growing adoption of AI technologies by banks, insurers, and asset managers is resulting in efficiency gains in areas such as risk modelling, trading, claims handling, fraud detection, and financial crime prevention. Generative AI use in finance does not seem transformational at present, at least for regulated financial institutions, as it focuses on operational efficiency improvements and is largely exploratory. Supervisors are also benefiting from AI, with an enhanced capacity to manage large volumes of data.
Notwithstanding these benefits, the use of AI also raises concerns in terms of model risk, data protection, governance, privacy, and ethics. It may also create financial stability risks given its potential to amplify interconnections among financial firms as well as complexity and opacity concerns around models and data.
Policymakers should strive to promote the safe use of AI in financial services, particularly through global cooperation on standards and best practices.
 
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Easing the burden on lower-income households is not only socially fair, but also economically efficient
Poor households in Germany and France pay up to $2 more per ton of emitted carbon dioxide than their higher-income compatriots. That is because products and services that wealthier people are likelier to consume—such as imported goods and travel outside the European Union—are exempt from carbon pricing. In other words, carbon pricing is regressive, meaning the poor pay proportionally more than the rich, as a share of their income.
New IMF research shows that correcting that distortion, in other words, equalizing carbon prices across countries, would spread the economic burden of emission reductions more evenly across households and alleviate the weight on poorer Europeans.
It is not only a socially fair objective. This would also be economically more efficient. It would ensure that cheaper emissions reduction options are implemented first, which would lower the cost of achieving European countries’ emission targets. And it would also distribute the cost of emissions reduction across firms, sectors, and countries.
The average highest-income household in Europe paid about $10.75 per ton of carbon dioxide in 2020. As the Chart of the Week shows, the lowest-income households pay on average $1.25 more. This gap rises to $1.75 and $2 in countries such as Germany and France, and $5 in Bulgaria.

Making carbon prices more uniform within countries and, better yet, across countries, would help equalizing the burden of cutting greenhouse gas emissions within EU countries.
In fact, a global price would be most effective in this regard, as it would raise carbon pricing embedded in EU households’ imports. Because such a scheme would also imply large differences in burdens across countries, one possible alternative is the IMF’s carbon price floor proposal, which could promote economic efficiency. The ongoing extension of carbon pricing to road transport and heating fuels should also make carbon pricing less regressive.
EU economies will likely remain more open (on average) and apply higher carbon prices than their trade partners. So, the revenues from pricing domestic carbon emissions will continue to exceed the carbon pricing costs embodied in European household consumption bundles. This should allow the burden of carbon pricing on lower-income households to be eased.
 
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WASHINGTON – On September 25, 2024, under the United States-European Union Trade and Technology Council (TTC), the Office of the United States Trade Representative, the United States Department of Labor, and the European Commission held a virtual meeting of the transatlantic tripartite Trade and Labor Dialogue (TALD).
During the meeting, government officials briefed stakeholders, including labor unions and businesses, on the progress made by the United States and the European Commission on the “TALD Social Partner Joint Statement on Transatlantic Forced Labor Trade Strategy” and debriefed on the January 2024 labor stakeholder workshop on the “Promotion of good quality jobs for a successful, just, and inclusive green economy,” which was held under the Transatlantic Initiative for Sustainable Trade (TIST).
U.S. and European Commission officials provided updates on how we are working collaboratively towards eradicating forced labor from our supply chains. This included actions on forced labor policies, support for businesses and labor unions to implement effective due diligence, support for third countries, and the promotion of decent work.
The United States and European Commission also discussed the January 2024 TIST labor stakeholder workshop and potential next steps, including hosting a workshop at a later date to further discuss public and private investments that combat climate change, create high-quality jobs, and address skills shortages in clean energy industries.
 
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CHIPS Investment Expected to Nearly Double U.S. Production Capacity of Sensor and Power Chips at Bloomington, Minnesota Manufacturing Facility
Today, as part of the Biden-Harris Administration’s Investing in America agenda, the U.S. Department of Commerce announced its first award under the CHIPS Incentives Program’s Funding Opportunity for Commercial Fabrication Facilities of up to $123 million in direct funding to Polar Semiconductor (Polar). The award follows the previously signed preliminary memorandum of terms and the completion of the Department’s due diligence. The award will expand and modernize the company’s manufacturing facility in Bloomington, Minnesota. The Department will distribute the funds based on Polar’s completion of project milestones.
“Semiconductors – those tiny chips smaller than the tip of your finger – power everything from smartphones to cars to satellites and weapons systems. I signed the CHIPS and Science Act to revitalize American leadership in semiconductors, strengthen our supply chains, protect our national security, and advance American competitiveness. And over the last three and a half years, we have done just that, catalyzing over $400 billion in private sector investments in semiconductors and electronics that are creating over 115,000 construction and manufacturing jobs. This year alone, the United States is on pace to see more investment in electronics manufacturing construction than it did over the last 24 years combined,” said President Joe Biden. “Today’s announcement that the Department of Commerce has finalized the first commercial CHIPS Incentives award with Polar Semiconductor marks the next phase of the implementation of the CHIPS and Science Act, and demonstrates how we continue to deliver on the Investing in America agenda. Polar’s new facility will also be completed under a Project Labor Agreement to support its construction workforce, creating good-quality union jobs in Bloomington, Minnesota. Today’s announcement is just one of the many ways our Investing in America agenda is reshoring U.S. manufacturing, investing in workers and communities across the country, and advancing America’s leadership in the technologies of tomorrow.”
“Today represents an important milestone in the implementation of the historic CHIPS and Science Act as we announce the first award agreement with Polar,” said U.S. Secretary of Commerce Gina Raimondo. “The Biden-Harris Administration’s investment in Polar will create a new U.S.-owned foundry for sensor and power semiconductors and modernize and expand Polar’s facilities in Minnesota, strengthening our national and economic security, bolstering our supply chains, and creating quality jobs.”
The Biden-Harris Administration’s investment will support Polar’s efforts to almost double its U.S. production capacity of sensor and power chips within two years. This award catalyzes a total investment of more than $525 million from private, state, and federal sources to transform Polar from a majority foreign-owned in-house manufacturer to a majority U.S.-owned commercial foundry. Through Polar’s semiconductor manufacturing operations, the Administration’s investment is expected to create over 160 manufacturing and construction jobs in Minnesota.
For more information about Polar’s award, please visit the CHIPS for America website.
“The Biden-Harris Administration’s investment into Polar marks the first award, of many to come, into communities across our nation to regain our lead in semiconductor manufacturing,” said Lael Brainard, National Economic Advisor.
“Polar and its employees are excited to embark on our transformative project. We welcome new customers and partnerships, and as a domestic U.S.-owned sensor and advanced power semiconductor merchant foundry, we will support technology and design innovation, protect intellectual property, facilitate onshoring and technology transfers, and provide efficient low- to high-volume manufacturing with world-class quality,” said Surya Iyer, President and Chief Operating Officer of Polar Semiconductor. “Through our collaborative and sustained workforce development efforts, we expect to support customers with highly skilled employees today and into the future. We are pleased to close on the significant equity investment from Niobrara Capital and Prysm Capital, and we extend our sincere thanks to our partners at the U.S. Department of Commerce, the State of Minnesota, and the City of Bloomington for their support of the future of American semiconductor manufacturing.”
The purpose of the Award Phase is to finalize comprehensive due diligence and negotiate the final award documents. As stated in the CHIPS Notice of Funding Opportunity for Commercial Fabrication Facilities, the Department will distribute direct funding based on the completion of project components in connection with both the capital expenditures for the project and production and commercial milestones. The program will track the performance of each CHIPS Incentives Award through financial and programmatic reports, in accordance with the award terms and conditions, to establish a compliance program to monitor that commitments are being upheld.
About CHIPS for America
CHIPS for America has allocated more than $35 billion in proposed funding across 16 states and proposed to invest billions more in research and innovation, which is expected to create over 115,000 jobs. Since the beginning of the Biden-Harris Administration, semiconductor and electronics companies have announced over $400 billion in private investments, catalyzed in large part by public investment. CHIPS for America is part of President Biden and Vice President Harris’s economic plan to invest in America, stimulate private sector investment, create good-paying jobs, make more in the United States, and revitalize communities left behind. CHIPS for America includes the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, responsible for R&D programs, that both sit within the National Institute of Standards and Technology (NIST) at the Department of Commerce. Visit chips.gov to learn more.
 
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The EU has kicked off a week of high-level meetings and events during the UN General Assembly in New York. During the weekend, Executive Vice-President Vestager, Vice-President Šuica and Commissioner Urpilainen participated in the Summit of the Future’s Action Days covering topics ranging from youth, children’s rights, sustainable development, demography, gender equality and sexual reproductive health, as well as the Global Digital Compact adopted at the Summit of the Future.
On Sunday, President of the European Council Charles Michel, High Representative/Vice-President Josep Borrell, and Commissioner Jutta Urpilainen, represented the EU in a trilateral meeting with the African Union and the United Nations. See the Joint Communiqué here. They then held a bilateral meeting with UN Secretary-General António Guterres. High Representative Borrell co-hosted a Ministerial dinner on the Middle East with the participation of representatives from all over the world. Commissioner Kyriakides attended the annual Representation Matters reception organised by Women Political Leaders focusing on enhancing women’s participation in policymaking.
Today, President Ursula von der Leyen will deliver a keynote address at the Association of Small Islands States Leaders’ Meeting, which will be live on EbS at 14:00 CEST (08:00 EST). High Representative Borrell will reiterate the EU’s support to Ukraine’s energy sector in a G7+ Foreign Ministers meeting, including the €160 million package worth of support announced by President von der Leyen last week. In the afternoon, he will chair the annual informal meeting of EU Foreign Affairs Ministers, with Ukraine and the Middle East region on top of the agenda. Ukrainian Foreign Minister Andrii Sybiha will join a part of the meeting upon the High Representative’s invitation. Commissioner Urpilainen will represent the Commission at that meeting. Doorstep remarks will be transmitted live on EbS as of 20:45 CEST (14:45 EST). High Representative Borrell will hold a press conference at around 00:00 CEST (18:00 EST), transmitted live on EbS. In the evening, he will participate in a G7 Foreign Ministers’ meeting.
Vice-President Šuica, together with the African Union and UNICEF, will bring leaders from governments, business and civil society at the High-Level event ‘Proven solutions for children: accelerating progress for the SDGs and beyond’, focusing on concrete, cost-effective, and evidence-backed policy solutions for every child. Vice-President Šuica will also speak at a high-level event on children and climate change organised by UNICEF and the UN Climate Change Conference COP 29. Commissioner Johansson will host the high-level side event ‘Leading the way forward: managing migration globally’ together with UNHCR, IOM and UNDOC drawing political attention. Commissioner Urpilainen will sign a Declaration on School Meal Coalition with the World Food Programme during the Global Education Forum, committing to ensure that every child receives a nutritious meal in school by 2030. Commissioner Simson will participate in the Global Renewables Summit, the first high-level public-private summit to discuss the progress, opportunities and challenges of tripling renewable energy globally by 2030. She will deliver opening remarks at the Sustainability Summit. Commissioner Hoekstra will participate in a roundtable organised by the World Economic Forum on mobilising Business for COP impact.
 
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