The government delivered a policy statement on Monday on the responsible use of artificial intelligence (AI) in the finance market, saying it is addressing challenges the technology brings and encouraging its development.

In the statement, the administration said it is both open and prudent towards the application of AI, while saying it wants the sector to use it in a responsible manner, noting issues such as cybersecurity and intellectual property rights.

Financial Secretary Paul Chan said officials will closely monitor market developments and draw on experiences on the mainland and overseas.

He said the government will promote the use of AI in finance to accelerate the development of new quality productive forces tailored to Hong Kong's conditions.

"We consider it appropriate to adopt a dual-track model to AI. We will continue to encourage the adoption of AI to capture opportunities, while assessing its associated risks from time to time and mitigate them," the minister said during a speech at Hong Kong Fintech Week.

Secretary for Financial Services and the Treasury Christopher Hui said the University of Science and Technology will allow financial firms to use its AI language model, called InvestLM.

"[The university is] going to make their model available for use, not just for the big firms, but also the small firms in the financial services sector, including accounting and others, in such a way that they can try for themselves how AI can improve their work processes," he said.

Hui added that around 38 percent of institutions in the local financial sector use AI, about 12 percentage points higher than the global average.

In the policy statement, the government added that it thinks the use of AI in finance is data-driven and dynamic, yet also double-edged in that it has both potential and risks. It said AI is a tool and shouldn't replace human judgement and analysis.

"Financial institutions should formulate an AI governance strategy to provide direction on how AI systems should be implemented and used. A risk-based approach should be adopted in the procurement, use and management of AI systems and human oversight will be crucial to mitigating the potential risks," it said.

The government said risks posed by the technology have been suitably reflected in relevant regulations and guidelines issued by financial regulators.

Officials also said the police have been exchanging intelligence with their overseas counterparts and the AI industry to address the cyber policing challenges posed by AI.