The European Systemic Risk Board’s Advisory Scientific Committee has published a report assessing whether artificial intelligence can create or amplify systemic risks in the financial system and setting out a measured policy approach that could include adjustments to prudential regulation. The analysis reviews 11 features of AI against key sources of systemic risk, including liquidity mismatches, common exposures, interconnectedness, lack of substitutability and leverage. It identifies five features that could significantly amplify systemic risk: concentration and entry barriers, model uniformity, monitoring challenges, overreliance and excessive trust, and speed. The report proposes combining competition and consumer protection policies with targeted prudential changes covering capital and liquidity regulation, “skin-in-the-game” and “level of sophistication” requirements, and enhanced supervision, and it highlights the need for cross-border cooperation given AI’s global reach.
European Systemic Risk Board 2025-12-04
European Systemic Risk Board Advisory Scientific Committee publishes report on artificial intelligence as a potential amplifier of systemic risk
The European Systemic Risk Board’s Advisory Scientific Committee released a report evaluating AI's potential to create or amplify systemic risks in the financial system. It identifies five AI features that could significantly increase systemic risk and suggests a policy approach combining competition, consumer protection, and targeted prudential changes. The report emphasizes the importance of cross-border cooperation due to AI's global impact.