Lagarde Warns of AI Risks in Finance as Euro Area Banks Ramp Up Use

Christine Lagarde, President of the European Central Bank and Chair of the European Systemic Risk Board (ESRB), addressed the tenth annual conference of the ESRB on October 1, 2026. She highlighted the rising importance of artificial intelligence (AI) in finance and its potential to create new risks across the financial system.

The use of generative AI is widespread in finance, with nearly nine out of ten significant euro area banks already using it. AI can help financial institutions analyze vast amounts of data more quickly and improve risk assessment. However, as AI agents take on more discretion, they may pursue goals in ways their human overseers did not intend.

The ESRB is concerned about three areas where recent developments in AI could create risks: financial market trading, cyber resilience, and geopolitics. In financial market trading, the use of agentic AI could lead to misalignment, where AI agents may pursue goals that are not aligned with their human overseers' intentions.

The ESRB also warned about the potential for attackers to exploit weaknesses in financial firms' systems more quickly than defenders can respond. This is a growing concern as frontier AI models continue to advance rapidly.