The Financial Stability Oversight Council, which includes the heads of all the major U.S. regulators, has named artificial intelligence an “emerging vulnerability” for the first time in its annual report, saying its use requires “thoughtful implementation and supervision” to harness its potential and manage risks. (The Logic)

Talking point: The FSOC joins the U.S. Securities and Exchange Commission in flagging AI’s potential risks to financial stability as regulators of all kinds mull how to adapt to the technology’s opportunities and challenges. U.S. Treasury Secretary Janet Yellen, who also chairs the FSOC, predicted at a Thursday council meeting that financial players’ use of AI will continue to grow, but that existing regulations will be able to curb its potential market risks. In October, the Ontario Securities Commission and Ernst & Young released a joint report that found Ontario capital markets players are already using AI to allocate assets, forecast prices and liquidity, and support sales and marketing, among other uses.