Artificial Intelligence Warning from Lagarde: Financial Stability and Cyber Security Risks

Speaking at the opening of the ESRB's 10th Anniversary Conference, Lagarde called for cooperation on a global scale, citing Stephen Hawking's quote, "Our future is a race between the increasing power of technology and the wisdom to use it." Stating that approximately 90 percent of the major banks in the Eurozone use productive artificial intelligence, Lagarde pointed out that the autonomy brought by this technology poses three main risks in financial markets, cyber resilience and geopolitics.

Lagarde stated that artificial intelligence agents acting independently of human control in financial markets can lead to price manipulations and price distortions by magnifying market shocks.

ECB President Lagarde said, "In order for artificial intelligence to be used safely in the financial sector, policy makers must foresee the risks to the entire financial system." he said.

'CYBER DEFENSE LINES CAN BE BROUGHT'

Noting that artificial intelligence has reduced the speed of finding system vulnerabilities and exploiting them from weeks to hours, Lagarde stated that these agents can overcome cyber defense lines.

In her speech, Lagarde stated that the EU Artificial Intelligence Act (AI Act) is an important step that sets rules according to risks and said:

"Combating increasingly powerful leading edge AI models will require global cooperation. There are precedents for this in history. During the Cold War, the United States and the Soviet Union agreed to impose limits on their nuclear capabilities and worked to prevent the proliferation of nuclear weapons, even as they continued to compete with each other."

Lagarde stated that it would be a "short-sighted" approach for the USA to see a global agreement as a tool to slow itself down, as it is in a leading position in this race, and said that the common interest should be taken into consideration to protect critical systems and prevent technology from falling into the hands of malicious actors.