Lagarde urges Europe to build AI capabilities for financial resilience

European Central Bank President Christine Lagarde urged Europe to build its own artificial intelligence capabilities, warning that reliance on models developed elsewhere could threaten financial stability, Bloomberg reported.

Speaking in Frankfurt on October 1 at a conference of the European Systemic Risk Board, which she chairs, Lagarde said Europe should become an essential part of the AI supply chain. Access to tools needed for financial resilience should not depend on decisions made elsewhere, she said.

Lagarde warned of concentration risk if financial institutions rely on a small number of AI models or providers to adjust trading strategies or identify weaknesses in their systems. Losing access in that situation could seriously disrupt financial stability, she said.

She pointed to a faulty software update in the summer of 2024 that grounded flights and disrupted banking services worldwide as an example of the risks posed by concentrated technology dependencies.

Lagarde and other members of the ECB’s Governing Council have repeatedly warned that Europe must avoid falling too far behind the US in AI, according to Bloomberg.