Christine Lagarde: Where AI risks meet

Welcome address by Christine Lagarde, President of the ECB and Chair of the European Systemic Risk Board, at the tenth annual conference of the ESRB

It is a pleasure to welcome you to the tenth annual conference of the European Systemic Risk Board (ESRB), as we mark 15 years since its creation.

The ESRB was born of a hard lesson laid bare by the global financial crisis and reinforced by Europe’s sovereign debt crisis.

Risks had been building across institutions and markets, while the view of any one authority remained incomplete. Europe needed a way to see the financial system as a whole, so it brought central banks and supervisors together around one table to provide that overall perspective.[1]

15 years on, the rising importance of artificial intelligence (AI) is putting that system-wide view to the test.

Generative AI is already widely used in finance. Nearly nine out of ten significant euro area banks use it.[2] Furthermore, in a recent survey of EU securities market firms, seven out of ten respondents expected to increase their investment in AI.[3]

There is good reason for that interest. AI can help financial institutions analyse vast amounts of data more quickly and improve how they assess risk.[4] More broadly, the potential productivity gains could allow firms to offer customers a better service while using their resources more efficiently.

To date, most uses of AI in finance involve limited autonomy. But AI agents are beginning to take on more discretion. They can pursue a goal with limited human direction, potentially devising trading strategies or finding vulnerabilities in the systems on which trading depends.

The ESRB is well placed to examine how recent developments in AI could create risks across the financial system. I see three areas that call for particular attention.

In financial market trading, AI agents may pursue goals in ways their human overseers did not intend and cannot detect.