Artificial Intelligence and Systemic Risk
23 Pages Posted: 28 Jun 2019 Last revised: 9 Mar 2020
Date Written: March 1, 2020
Artificial intelligence (AI) is rapidly changing how the financial system is operated, taking over core functions because of cost savings and operational efficiencies. AI will assist both risk managers and microprudential authorities. It meanwhile has the potential to destabilise the financial system, creating new tail risks and amplifying existing ones due to procyclicality, endogenous complexity, optimisation against the system and the need to trust the AI engine.
Keywords: Artificial intelligence, systemic risk
JEL Classification: G00, G38, G21
Suggested Citation: Suggested Citation