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Abstract
The acceleration of digital transformation across global financial systems has introduced both new efficiencies and new fault lines in macroeconomic stability. Drawing on data and analytical frameworks from the International Monetary Fund, the Bank for International Settlements, and the Financial Stability Board, this paper examines how technologies—artificial intelligence, big data analytics, distributed ledger systems, and decentralized finance protocols—are simultaneously reshaping the architecture of financial intermediation and generating systemic risks that regulators have been slow to address. The analysis proceeds in three parts: a review of documented efficiency gains, an assessment of emerging vulnerabilities, and an evaluation of regulatory responses including regulatory technology, supervisory technology, and central bank digital currencies. The paper concludes that digitalization is neither inherently stabilizing nor destabilizing; its net effect on financial stability depends almost entirely on the speed and coherence of institutional adaptation.