IMF Warns AI Is Reshaping Finance, Amplifying Market Volatility and Systemic Risks on July 24

According to the IMF on July 24, artificial intelligence is reshaping core financial systems but could amplify market volatility and systemic risks. The organization warned that large-scale simultaneous use of AI models may trigger "AI herding effects," where machines based on similar data simultaneously adjust positions, potentially accelerating market swings and flash crash risks.

The IMF highlighted three priority areas: strengthening governance of AI-driven trading and credit operations; enhancing transparency on AI applications and model dependencies; and bolstering international cooperation on financial resilience. The organization also flagged risks from concentrated reliance on cloud providers and data suppliers, noting that technical failures or cyberattacks on key infrastructure could simultaneously disrupt multiple financial institutions.