Lagarde warns: AI could trigger the next financial crisis

```

As AI penetrates the financial system at unprecedented speed, regulators are concerned: Have the seeds of the next financial crisis quietly been sown within algorithms and models?

On Wednesday local time, European Central Bank President Christine Lagarde warned in a speech in Venice, the greatest risk of this technological revolution is not the technology itself, but rather its potential to amplify the fragility of the financial system, ultimately evolving into a new financial crisis.

She pointed out that the development of artificial intelligence is irreversible, and the core task of regulators is to ensure that the public enjoys the benefits of technology while being shielded from potential risks. As AI systems’ capabilities continue to grow, their influence is rapidly spreading into the economic and financial sectors. Financial stability will become one of the most severe challenges in the future. She stated:

"In modern history, the forces that have destroyed the most jobs and wiped out the most savings have not been technology, but financial crises."

AI Reshapes the Financial System, Lagarde Warns of New Risk Concentration Points

In recent years, AI's application in the financial industry has expanded rapidly, penetrating risk management, trade execution, customer service, and many other areas—covering almost all facets of banking and financial institutions’ operations.

But Lagarde pointed out that the real concern is: As more institutions rely on similar models, algorithms, and data sources, new risk concentration points quietly emerge. If the system misjudges, is attacked, or triggers herd effects, the impact could far exceed traditional financial risk events.

She emphasized that AI is reshaping the financial system from within, creating new channels for risk concentration and opening new windows for malicious actors. Unlike previous technological revolutions such as the internet or mobile communications, AI's impact is not just in boosting productivity, but may directly affect the mechanisms and transmission paths of financial market risks.

ECB Intensifies AI Risk Regulation, Lagarde Calls for Global Collaborative Governance

To identify potential risks in advance, the European Central Bank has already included AI-related risks in its banking regulatory framework. Lagarde revealed that the ECB had previously conducted special inspections on 109 banks, focusing on their ability to respond to cyberattacks and AI-related risks. Most identified issues have been rectified, but regulatory work is far from over.

Next, the ECB will send formal letters to chief executive officers of major banks, requiring them to further enhance their awareness and response capabilities regarding AI risks and prepare for continuous investment. Lagarde stressed that building defense systems against AI attacks, improving data security, and operational resilience all require banks to invest substantial resources and capital.

At the European level, Lagarde called for accelerating capital market integration and strengthening regulatory coordination to enhance the financial system’s overall resilience to technological shocks. She stated, ensuring this technological revolution does not evolve into a financial crisis is one of the most important ways the ECB serves the people of Europe.

On this basis, Lagarde further elevated AI risk governance to the core of the global agenda. She pointed out that the development of AI naturally crosses borders, and regulatory measures by a single country or region are insufficient to effectively constrain risks. The international community urgently needs to establish a globally coordinated regulatory framework to realize cross-border governance of AI.

Risk Warning and DisclaimerMarkets are risky, investment requires caution. This article does not constitute personal investment advice, nor does it take into account any individual user's specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investing based on this article is at your own risk. ```