Central banks and financial supervisors face the key challenge of containing financial stability risks by ensuring Artificial Intelligence (AI) is governed to strengthen rather than undermine stability, according to an expert analysis by the International Monetary Fund (IMF). The analysis outlines three priorities: strengthen oversight of AI-driven trading, lending, and supervisory technology (SupTech); improve visibility into AI use, dependencies, and asset correlation risks from synchronized trading; and deepen international cooperation on operational resilience and cyber defense. It notes that AI compresses time and distance in finance, reshaping how firms price risk and respond to stress, and that responsibilities for market functioning and stability are increasingly rooted in AI policy. Some AI-based funds rebalance much faster than traditional strategies, amplifying swings when many models respond to similar signals, and future flash crashes may arise from many AI systems reacting in parallel to the same information. Opacity adds challenge, as even sophisticated institutions struggle to explain AI-based strategy behavior under stress. IMF analyst Tobias Adrian said policies need to catch up, requiring enhanced monitoring, mapping correlation risks, and stress testing that captures AI-based decision-making speed and scale.