FirstFT: Basel chief says financial rules should be blueprint for AI ahead of Davos

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Good morning. We’re kicking off a busy week with an exclusive interview with the chair of the world’s banking watchdog as the World Economic Forum’s annual meeting in Davos begins today.

Pablo Hernández de Cos, who leads the Basel Committee on Banking Supervision and is also governor of the Bank of Spain, has urged global leaders ahead of this week’s event in Switzerland to take a co-ordinated response to the challenges posed by artificial intelligence, warning that the fast-developing technology “could change the course of history, not necessarily for the good”.

De Cos told the Financial Times that the “really remarkable” co-operation on financial regulation that allowed watchdogs to keep the world’s financial system stable through a pandemic and two wars should be applied to AI. Read the full interview here.

The potentially far-reaching impact of AI on industries, jobs and security will feature prominently at Davos, with OpenAI’s Sam Altman, Satya Nadella of Microsoft and Arvind Krishna of IBM all expected to speak. Here’s more from the annual gathering of business and political elites:

And here’s what else I’m keeping tabs on today:

• Economic data: Rightmove has its house price index for the UK.

• US election: The Republican party’s caucuses in the state of Iowa launch the 2024 race for the White House, with former president Donald Trump remaining the favourite to win his party’s nomination. Find all our coverage on the US presidential election here.

• Companies: Ashmore, PageGroup and Rio Tinto, which is expected to start work on the world’s largest mining project this year, have updates.

• Martin Luther King Jr. Day: US markets are closed to mark the birthday of the civil rights leader.

Five more top stories

1. The UK government has vowed to protect litigation funding that helped hundreds of sub-postmasters to take the Post Office to court in the Horizon IT scandal. Justice secretary Alex Chalk told the FT that he planned to reverse “the damaging effects” of a Supreme Court ruling last summer that critics claim has plunged the litigation funding sector into jeopardy.

• Explainer: Who were the senior Post Office board members who allowed the matter to drag on long after Fujitsu’s Horizon software was found to be fatally flawed?

• Fujitsu: British officials said the government tried to block the Japanese group from new public IT contracts in the early 2010s in a drive nicknamed “Project Sushi”.

2. A steep increase in petrochemical production has sent the price of new plastic so low that its recycled alternative has become uneconomical to use. China was responsible for 60 per cent of petrochemical capacity increases last year, while US production has also surged due to the shale gas boom, leading to a level of oversupply of the chemicals used in plastics not seen since the 1980s.

3. Exclusive: Tether is one of the leading payment methods for money launderers and fraudsters operating in south-east Asia, the UN has warned. The cryptocurrency and its platform of the same name are at the heart of scams including those that engineer false romantic connections to lure large sums of money from victims. Here are more findings from the UN’s report.

4. Former US officials have emphasised continuity during an unofficial visit to Taiwan right after polls that elected the Democratic Progressive party’s Lai Ching-te as president. China has denounced him as a dangerous separatist and lashed out at Washington yesterday for congratulating Lai on his victory. Read more on the delegation, which arrived in Taipei yesterday.

5. Exclusive: An internal review has backed Business Insider’s reports of plagiarism by academic Neri Oxman, the wife of billionaire Bill Ackman. The publication’s claims about the former MIT professor’s work were “accurate and well documented” and there was “no unfair bias”, chief executive Barbara Peng told staff in an internal memo. Here’s more on the latest development in the spat.

The Big Read

The UK now has a shortfall of 4.3mn new homes, according to one measure, contributing to record rent increases, soaring house prices and 1.2mn people on local authority housing lists. Not only does this shortage have large and obvious human costs, it is also adding to the country’s stagnating economy. While the Conservative and Labour parties agree on the need for planning reform, both have also failed to deliver it in the past.

We’re also reading . . . 

• Middle East conflict: US-led strikes on Houthi rebels in Yemen have reignited fears of a wider conflict that could inflame price growth just as inflation appears to be subsiding. 

• Joseph Nye: In an interview with Henry Mance, the Harvard professor who coined the term “soft power” discusses US-China tensions and the turmoil at his university.

• Boeing: The US plane maker’s efforts to strengthen engineering processes are coming under scrutiny after its mid-air door plug blowout.

• UK election: With artificial intelligence tools and right-wing broadcast channels, voters will be entering an electoral landscape in which the rules of the game have changed.

Chart of the day

German companies are expected to go bust at a higher rate this year, hit by a combination of economic stagnation and high costs. But the country is playing catch-up with the rest of the world, with global insolvencies forecast to rise by 10 per cent this year.

Take a break from the news

Fifteen years after he quit drinking, Nick Johnstone found himself a surprising new hobby: picking the perfect wines to serve. In this thoughtful essay, Johnstone tells how wine — once a poison — became his sober passion.

Additional contributions from Benjamin Wilhelm