Christine Lagarde: Where AI risks meet

What happened: In an ESRB conference welcome address, ECB President Christine Lagarde said AI's growing role in finance tests the system-wide view the ESRB was created to provide, and named three risk areas: trading, cyber resilience, and geopolitics. Key numbers: Nearly nine in Why it matters: Lagarde said the three risks can interact and compound across the financial system, calling for encompassing macroprudential monitoring. She cited ESRB warnings that similar models may lead firms to trade alike and reinforce price moves, and that misalignment and AI collusion could distort prices.

In an ESRB conference welcome address, ECB President Christine Lagarde said AI's growing role in finance tests the system-wide view the ESRB was created to provide, and named three risk areas: trading, cyber resilience, and geopolitics.

Lagarde said the three risks can interact and compound across the financial system, calling for encompassing macroprudential monitoring. She cited ESRB warnings that similar models may lead firms to trade alike and reinforce price moves, and that misalignment and AI collusion could distort prices.