European Central Bank President Christine Lagarde warned that artificial intelligence poses a tangible threat to financial stability and outlined steps the ECB is taking to limit that risk.
Speaking in Venice, Lagarde acknowledged that halting the development of AI is not realistic, even under strict regulatory regimes. "We cannot stop artificial intelligence, even with our sound regulations," she said. "What we can do, however, is prepare ourselves so that our citizens can benefit from it and be protected from its dangers, and that's what we're doing."
Lagarde stressed that the central concern is not the technology itself but the disruption it could create in markets. "In recent history, there is one force that has destroyed more jobs and wiped out more savings than technology ever has, and that force is financial crises," she said. "As these systems become more powerful, they are expanding further and further into the economy."
To test resilience, the ECB simulated an extreme cyber-attack scenario across 109 banks. Lagarde said the exercise exposed weaknesses that have largely been remedied, and that the ECB will reach out directly to bank CEOs to ensure institutions are prepared for attacks that could be related to AI and to make clear that addressing such threats will demand significant investment.
On the systemic implications, Lagarde warned that AI will reshape finance from within. "AI is set to reshape the financial sector from within, creating new concentrations of risk and new openings for those who would do harm," she said, highlighting the potential for the technology to both concentrate exposures and create new attack vectors.
Beyond immediate operational preparedness, Lagarde advocated for a broader governance framework. She called for an international approach to AI governance akin to non-proliferation agreements from the Cold War era. Within Europe, she urged progress toward a capital markets union paired with careful oversight and further measures to strengthen bank resilience.
She summarized the ECB's objective succinctly: "Making sure that this technological revolution does not become a financial crisis is how we at the European Central Bank can help best serve the people of Europe," she said.
The ECB's message combines practical testing and remediation with calls for policy coordination - emphasizing that readiness will require both operational investment by banks and stronger cross-border governance to limit systemic spillovers as AI becomes more embedded in financial services.