On 4 August 2023, the European Banking Authority published a follow-up report setting out the feedback it received to its earlier discussion paper on machine learning used in the context of internal ratings-based (IRB) models. The EBA also covers the interaction between prudential requirements on IRB models and two other legal frameworks that have an impact on internal credit risk models that use machine learning techniques, namely the General Data Protection Regulation and the Artificial Intelligence Act. Furthermore, the EBA reiterates its recommendations proposed in the discussion paper, which were broadly supported by respondents, aiming to ensure a prudent use of machine learning models in the context of the IRB framework.
