Nearly nine in ten significant euro-area banks already use generative AI, while seven in ten surveyed EU securities firms expect to increase AI investment, ECB President Christine Lagarde said in a new ESRB speech. Her warning centers on the possibility that risks in trading, cybersecurity and geopolitics could reinforce one another as financial institutions rely on a relatively small group of frontier models and give AI greater autonomy. Similar systems could interpret market shocks alike and recommend the same trades, intensifying price moves instead of diversifying them. Autonomous trading remains limited: only 5% of asset managers surveyed this year said AI had autonomous or semi-autonomous authority over investment recommendations or trades. The ECB’s May Financial Stability Review also warned that AI exposure is becoming more concentrated across public equities, corporate debt and private markets. Riskier IT bond spreads have widened more than broader credit spreads, while AI companies and infrastructure projects are increasingly using borrowing. The report’s historical framing is that periods combining unusually strong equity-price gains with rapid business-debt growth have been followed by crises more often. The AI buildout is now extending into data-center debt and increasingly complex off-balance-sheet exposure, while Coinpaper has tracked the technology boom’s spread from equity markets into debt, private credit and infrastructure finance.