Where AI risks meet in the financial system

Christine Lagarde, President of the European Central Bank (ECB) and Chair of the European Systemic Risk Board (ESRB), delivered the opening address at the tenth annual ESRB conference, marking 15 years since its creation.

The ESRB was established in response to lessons from the global financial crisis and Europe’s sovereign debt crisis, to provide a comprehensive view of the financial system by bringing together central banks and supervisors.

Today, the rising importance of artificial intelligence (AI) presents new challenges to this system-wide oversight. AI is already widely used in finance, with nearly 90% of significant euro area banks employing it, and 70% of surveyed EU securities market firms planning to increase their AI investments.

AI can enhance data analysis and risk assessment, offering productivity gains and improved customer service. However, increasing autonomy in AI agents—such as pursuing goals with limited human oversight—raises risks including market manipulation, cyber vulnerabilities, and geopolitical tensions.

Lagarde highlighted three key areas of concern:

• Financial market trading: AI agents may pursue unintended goals, potentially amplifying market moves and causing misalignment with human oversight.
• Cyber resilience: Rapid AI advancements could reduce the time to detect and contain cyberattacks, with AI-enabled attacks already demonstrating high capabilities.
• Geopolitical risks: Concentration of AI development in the US and China, and recent export controls, could disrupt access to vital AI models, threatening financial stability.

Lagarde emphasized the importance of developing Europe’s own AI capabilities and fostering international cooperation to prevent reliance on external models. She concluded by stressing the need for updated cyber defenses and coordinated responses to AI-related risks, reaffirming the ESRB’s commitment to monitoring systemic risks and supporting authorities.