The piece examines how artificial intelligence can both enhance finance and increase systemic risk in the financial system. It focuses on how AI interacts with key sources of systemic risk—liquidity mismatches, common exposures, interconnectedness, lack of substitutability, and leverage—and how specific features of AI may amplify these vulnerabilities.

​Key takeaways:

• AI delivers benefits like higher productivity, improved decision making and risk management, and better asset allocation, but these gains come with potentially significant systemic risks for finance

• Five core AI features—concentration and entry barriers, model uniformity, monitoring challenges, overreliance and excessive trust, and speed—can each amplify multiple sources of systemic financial risk.

• The authors call for a mix of competition and consumer protection policies plus recalibrated prudential regulation and supervision (capital and liquidity rules, circuit breakers, disclosure, insider‑trading standards) to contain AI‑driven systemic risks.

“In view of the potential systemic risks, it is essential to implement policies to ensure safe use of AI. Should authorities fail to keep up with the use of AI in finance, they would no longer be able to monitor emerging sources of systemic risk.”

Read the policy note.