IMF Warns: Automation Could Amplify Flash Crashes

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The IMF cautions that automated trading — already responsible for sudden plunges in traditional markets — might hit harder in tokenized environments. Complex smart-contract layers could interact “like falling dominoes” during market stress, making tokenized venues “more volatile” and potentially magnifying local failures into broader crises. Regulators, it suggests, will play a key role in containing those risks.

[Nahid Hossen]

Automation adds speed, but it also increases the risk of sudden market shocks.