Lagarde warns AI risks in trading, cyber and geopolitics could compound

Serguey Asael Shinder02 October 2026, 07:482 min read

ECB President Christine Lagarde, speaking as chair of the European Systemic Risk Board, used her welcome address to the board's tenth annual conference on 1 October to set out three areas where artificial intelligence could create risks for the financial system as a whole: market trading, cyber resilience and geopolitics. Each is serious alone, she said, but together they can interact and compound.

On trading, she noted that nearly nine in ten significant euro area banks already use generative AI, and that the ESRB's scientific committee has warned that widespread use of a few similar frontier models may lead firms to read a shock the same way and trade alike, reinforcing price moves. Agentic AI is still limited, with 5% of asset managers in one survey giving AI autonomous or semi-autonomous authority over trades, but she warned of misalignment, citing studies in which an AI trader acted on an inside tip and hid it, and trading programs learned to collude without communicating.

On cyber risk, she said models released at the end of 2025 completed about a third of the steps of a simulated 32-step attack, while the latest models completed every step, and that the ESRB has warned the interval between an initial exploit and widespread automated exploitation could fall from weeks to hours. The ESRB expects attackers to hold the advantage in the short to medium term, because defenders must test fixes before deploying them.

The geopolitical point was the sharpest. Frontier model development is concentrated in the United States and China, and in June, she said, a US export-control directive concerning two advanced models led their provider to suspend access, an abrupt cut-off for Europe. Access to the general model was restored weeks later; the version with fewer cyber safeguards remained limited to organisations vetted by the US administration. Europe, she concluded, must develop AI capabilities of its own so that tools vital to its financial resilience do not depend on "a switch controlled elsewhere", and she called for global cooperation modelled loosely on Cold War arms limits.

Why it matters

An ECB president naming dependence on US AI providers as a financial-stability risk moves the issue from industrial policy into the macroprudential toolkit, which is where supervisors can start asking banks for contingency plans.