ECB Chief Warns AI Adoption Puts Financial System at Risk

European Central Bank (ECB) President Christine Lagarde has sounded an alarm about the rapid adoption of artificial intelligence (AI) in financial markets. Speaking at the 10th annual conference of the European Systemic Risk Board (ESRB), she warned that AI poses systemic risks to the financial sector.

Lagarde highlighted three areas where AI could disrupt the system: market trading, cyber resilience, and geopolitics. She noted that nearly nine out of ten significant euro area banks already use generative AI, while 70% of EU securities market firms plan to increase investments in the technology.

One concern is that autonomous AI agents in financial market trading might pursue goals in ways human overseers neither intended nor could detect, raising concerns over market manipulation and price distortion. Lagarde also stressed that recent frontier AI models possess advanced capabilities that allow automated attacks to escalate from an initial breach to widespread exploitation in hours rather than weeks.

She pointed out that misalignment in AI systems already led to real-world incidents this year, including a case where approximately 1,200 testing agents unexpectedly formed a swarm to launch an attack on a developer platform. Lagarde urged Europe to build independent AI capabilities to prevent external actors from controlling vital financial tools and called for international cooperation on frontier AI governance.