EACB comments on EBA Discussion Paper on Machine Learning for IRB Models (EBA/DP/2021/04)

We appreciate the stance of the EBA in clarifying that the term machine learning (ML) mainly refers to the more complex ML models and that statistical regression methods do not fall under this term. However, in order not to curtail the further development of statistical methods into ML methods, we recommend caution in developing the recommendations and we suggest that these should not come too early so that banks would still have time to further elaborate their applications.
We also recommend keeping a proportionate approach in order to avoid stifling innovation while ensuring overall coherence of supervisory expectations and the regulatory framework, in light of the different pieces of legislation and incentives that would have to be considered (CRR-CRD framework and artificial intelligence – AI – developments) and the overarching policy objective to make the EU a leader in the field of AI.