JP Morgan, citing the IMF, warned AI is increasingly used for risk pricing, credit allocation and trading decisions. While this can improve execution efficiency and liquidity in normal conditions, widespread reliance on similar data, models and signals can produce highly synchronized de-risking in stress — simultaneous selling and credit tightening depress prices and liquidity, which then reinforces model sell signals in a procyclical feedback loop. The IMF says the systemic threat comes less fr

JP Morgan, citing the IMF, warned AI is increasingly used for risk pricing, credit allocation and trading decisions. While this can improve execution efficiency and liquidity in normal conditions, widespread reliance on similar data, models and signals can produce highly synchronized de-risking in stress — simultaneous selling and credit tightening depress prices and liquidity, which then reinforces model sell signals in a procyclical feedback loop. The IMF says the systemic threat comes less from isolated model errors than from many models making similar, seemingly rational decisions, increasing market correlation and the risk of amplified volatility and liquidity shortfalls.