Agentic AI · Cointelegraph
Central bankers sound alarms over agentic AI finance risks
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“We need to think about new tools and a different way of working with the [AI] market in a more collaborative way,” says Nikhil Rathi, CEO of the UK’s finance watchdog.
Key facts
- The Bank for International Settlements warned on June 28 that AI “exuberance” could have major financial consequences
- Meanwhile, Nikhil Rathi, CEO of the UK’s Financial Conduct Authority, told CNBC’s Squawk Box on Thursday that traditional regulation cycles don’t work in an era of fast-moving AI development
- Meanwhile, Tobias Adrian, Director of the IMF’s Monetary and Capital Markets Department, said on June 30 that there is a “potential maturity mismatch in between the duration of the physical assets and the duration of the debt
- European Central Bank President Christine Lagarde, outlet Les Echos on Thursday, warned that AI technology poses a “major risk
Summary
European regulators and central bankers have warned that rulemaking cannot keep pace with rapid advances in agentic artificial intelligence and have called for guardrails to protect the financial system. Bank of England deputy governor Sarah Breeden is one of several central bankers who have said that agentic AI could amplify volatility during bouts of market stress. Breeden questioned if guardrails are needed, “analogous to circuit breakers or kill switches that would limit or stop trading market-wide if faulty AI models cause market meltdown,” she said at the European Central Bank’s annual meeting in Sintra, Portugal, on Tuesday. US companies are leading in AI investment and frontier model development, and Europe’s financial system gives it fewer capital channels into AI compared to the US equity markets.