3 spectres haunting global finance must be seen before it’s too late

Fledgling artificial intelligence (AI) models, the opacity of shadow banking and the euphoria over cryptocurrency are new fault lines in global finance, emerging as dangers that are more dispersed and harder to contain than those of the last crisis.

Without coordinated action, we risk stumbling into another systemic breakdown, one that no financial institution or government can resolve alone. Yet, world leaders, overwhelmed by tariff flare-ups and escalating wars, are unlikely to champion needed changes, especially while investors are complacent and the economy stays resilient. They face a dilemma: crying wolf too often erodes credibility; crying too late invites catastrophe.

AI, purporting to optimise efficiencies and mitigate risks, could usher in the next Lehman moment. The problems originate from how algorithms collect and analyse data before executing solutions, argues London School of Economics professor Jon Danielsson.