REGULATION · EU
ECB warns on financial stability risks from algorithmic architecture in AI systems
ECB released guidance on how AI system design (model architecture, feedback loops, interconnections) poses systemic risk to financial stability. Banks must now assess not just model accuracy but how algorithms interact under stress.
WHY IT MATTERS
Supervisors will shift from model-level risk assessment to network-level contagion risk—expect new capital requirements tied to 'algorithmic interconnectedness' by Q4 2026.