AI architecture ‘a source of financial instability’ – ECB paper
LLMs and Q-learning trading algorithms both amplify market distress, researchers find
Artificial intelligence-based algorithmic trading threatens financial stability, new research from the European Central Bank argues.
The paper, published on May 21, discusses how algorithmic agents behave in simulations where they are given the option to hold or redeem their funding shares under various sets of market fundamentals.
The researchers – Kartik Anand, Sophia Kazinnik, Agnese Leonello and Ettore Panetti – examine two types of agents: Q-learning algorithms, which are commonly used in
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: www.centralbanking.com/subscriptions
You are currently unable to print this content. Please contact info@centralbanking.com to find out more.
You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@centralbanking.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@centralbanking.com
More on Financial Stability
BoE accelerates multi-money, multi-asset tokenised agenda
Breeden urges ‘earnest’ work amid systemic risks from innovations abroad
Helder Lopes on Timor-Leste’s transformation now the oil has run out
BCTL governor speaks about dollarisation, the Petroleum Fund, Asean membership, digitalisation and financial deepening
Lagarde at G7 meeting: ‘I always worry’ about bond markets
Leaders meet to discuss Middle East conflict, global imbalances
AI, geopolitics, crypto among top AML worries – EU report
Boundary between fraud and money laundering ‘increasingly blurred’, says Amla
Tokenisation no substitute for trad-fi infrastructure – Cook
Fed governor highlights technology’s benefits for emerging economies but signals finstab risks
Case for euro stablecoins ‘weaker than it appears’, says Lagarde
ECB president says settlement in tokenised markets must be anchored in central bank money
UK needs closer EU ties in multipolar world – BoE’s Bailey
Governor urges greater support for multilateral institutions to solve growing global imbalances
Prolonged Iran conflict poses stability risks – Barr and Woods
Fed governor and UK’s PRA chief also make renewed case for central bank independence