BlockBeats News, July 24th. The International Monetary Fund (IMF) has issued a warning that artificial intelligence is entering the core of the financial system, transforming how transactions, credit, regulation, and financial infrastructure operate. However, the widespread simultaneous use of AI models may amplify market volatility and introduce new systemic risks.

The IMF stated that current financial regulators need to focus on three key areas: strengthening governance over AI-driven transactions, credit activities, and Supervisory Technology (SupTech); increasing market transparency regarding AI applications, model reliance, and risk exposure; enhancing international cooperation to boost financial system resilience and network defense capabilities.

The IMF pointed out that AI is compressing decision-making time in financial markets. Machine learning models are extensively used for trading strategies, high-frequency signal generation, corporate financial analysis, and credit risk assessment. Under normal market conditions, AI helps enhance liquidity, reduce costs, and improve risk identification.

However, during periods of market stress, AI could act as a volatility amplifier. When numerous AI models, based on similar data and signals, simultaneously adjust their positions, it may trigger an "AI herding effect," exacerbating market fluctuations and potentially increasing the risk of future "flash crashes."

Moreover, the opacity of AI models also increases regulatory challenges. The IMF believes that even large financial institutions may struggle to explain the decision-making logic of AI strategies in extreme market environments, weakening regulators' ability to identify risks in advance.

The IMF also cautioned that the centralized reliance on AI infrastructure is emerging as a new source of risk. Many financial institutions depend on a few cloud service providers, data vendors, and AI model suppliers. If key suppliers experience technical failures, network attacks, or geopolitical shocks, it could simultaneously impact multiple financial institutions.

In the regulatory field, AI is aiding central banks and financial institutions in enhancing market surveillance, risk identification, and regulatory efficiency. However, the IMF emphasizes that AI should strengthen regulatory judgment rather than replace human decision-making.