Financial stability in the age of artificial intelligence: the role of algorithmic architecture

Kartik Anand, Sophia Kazinnik, Agnese Leonello and Ettore Panetti

Research Bulletin, 2026, vol. 143

Abstract: Artificial intelligence (AI) is rapidly transforming financial decision-making. To explore the implications for financial stability we ran simulation-based experiments on two different AI architectures. We found that Q-learning algorithms, a form of reinforcement learning, achieved a high degree of coordination, but were prone to bank run-like dynamics. In contrast, large language models , which rely on contextual reasoning, were less prone to such runs but generated heterogeneous and unpredictable behaviour. This suggests that AI architecture is itself a source of financial instability: algorithms operating in the same environment, pursuing the same goals, yield fundamentally different outcomes for financial stability JEL Classification: G01, G23, C63

Keywords: AI agents; coordination games; financial stability; large language models; Q-learning; strategic uncertainty (search for similar items in EconPapers)
Date: 2026-05
Note: 2292323
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