EBA to consult on banks’ machine learning use

Watchdog will set out stance on ML-based capital models amid conflicting guidance from supervisors

European regulators are to consult on banks’ use of machine learning (ML) techniques to calculate credit risk capital requirements – a move that some hope will correct perceived imbalances in the way that national regulators apply existing regulations, which some claim has led to an uneven playing field.

The European Banking Authority is working on a discussion paper to be followed by a consultation on the use of ML techniques. The focus will be on internal ratings-based (IRB) models used to