EC Proposes Regulatory Framework for Artificial Intelligence
EC proposed a regulatory framework, along with the revised Coordinated Plan, for artificial intelligence in EU. The proposed regulation lays out harmonized rules for the development, market placement, and use of artificial intelligence systems, using a proportionate risk-based approach. Through this regulation, EC is proposing single future-proof definition of artificial intelligence. The Coordinated Plan outlines the necessary policy changes (also covers EU-wide data, cloud, and climate risk strategy) and investment at member state level to strengthen the leading position of Europe in the development of sustainable, secure, inclusive, and trustworthy artificial intelligence.
Proposed regulation on artificial intelligence. The proposal presents a balanced and proportionate horizontal regulatory approach to artificial intelligence that is limited to the minimum necessary requirements to address the risks and issues linked to artificial intelligence, without unduly constraining or hindering technological development or otherwise disproportionately increasing the cost of placing artificial intelligence solutions on the market. The proposed rule will be enforced through a governance system at member state level, building on already existing structures and a cooperation mechanism at EU level with the establishment of a European Artificial Intelligence Board. Additional measures are also proposed to support innovation, particularly through artificial intelligence regulatory sandboxes and other measures to reduce the regulatory burden and to support small and medium-size enterprises (SMEs) and startups. Specifically, the proposed regulation lays out:
- Harmonized rules for the placing on the market, the putting into service, and the use of artificial intelligence systems EU
- Prohibitions of certain artificial intelligence practices
- Specific requirements for high-risk artificial intelligence systems and obligations for operators of such systems
- Harmonized transparency rules for artificial intelligence systems intended to interact with natural persons, emotion recognition systems, biometric categorization systems, and artificial intelligence systems used to generate or manipulate image, audio, or video content
- Rules on market monitoring and surveillance
Coordinated plan on artificial intelligence. This comprehensive update of the Coordinated Plan, which was first published in 2018, proposes concrete joint actions for collaboration to ensure all efforts are aligned with the European Strategy on artificial intelligence and the European Green Deal, while considering the challenges brought by the COVID-19 pandemic. It aims to spur the implementation of national artificial intelligence strategies, remove fragmentation, and address global challenges. As part of the key proposed actions in this plan, EC is expected to propose a legislative action on horizontal framework on trustworthy artificial intelligence by the second quarter of 2021. EC is also expected to bring artificial intelligence into play for climate and environment by developing a roadmap for a common European Green Deal data space to exploit the major potential of data for sustainability and climate adaptation, creating a data space for climate-neutral and smart communities and validate through pilots focusing on European Green Deal action areas, and by starting to explore key performance indicators to identify and measure negative environmental impact of artificial intelligence. Appendix 1 to the plan sets out timeline for the key proposed actions.
Related Links
- Press Release
- Proposed Regulation on Artificial Intelligence
- Coordinated Plan on Artificial Intelligence
- Q&A on Proposal and Plan
Keywords: Europe, EU, Banking, Insurance, Securities, Artificial Intelligence, Proportionality, Q&A, European Green Deal, Regulatory Sandbox, Climate Change Risk, Sustainable Finance, EC
Featured Experts

Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.

James Edwards
James leads the initiative to model the risk implications of climate change for corporates, SMEs, and sovereigns.
Previous Article
SRB Publishes Resolution Planning Cycle Booklet for 2021Related Articles
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
US Agency Publications Address Basel, Reporting, and CECL Developments
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
SEC Extends Comment Period on Climate Risk Disclosures
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
APRA Reduces Committed Liquidity Facility, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.
EBA Updates Standards for 2023 Benchmarking of Internal Approaches
The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.
EIOPA Responds to Stakeholder Views on Blockchain in Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.