AI to safeguard US digital markets from economic exploitation

DARPA’s Intrinsic Market Resilience (IMR) program seeks AI tools capable of identifying hidden vulnerabilities within US financial and digital markets. These flaws, if exploited by adversaries, could lead to significant economic disruption. The agency emphasizes that the risk isn’t solely about hacking or data breaches, but rather exploiting weaknesses in the market design itself.

Matthew Wilding, IMR program manager at DARPA, explained that advancements in AI can be used both offensively and defensively. The program aims to utilize AI to proactively find and rectify vulnerabilities before they can be exploited. “The program is taking these two technologies that have really advanced in the last few years and applying them to these electronic markets, so that they are more resilient and more dependable going forward,” Wilding said.

Past incidents highlight the potential for market manipulation. In the early 2000s, flaws in California’s deregulated energy market led to a crisis costing between $40 billion and $45 billion, forcing the invocation of the Defense Production Act. The 2010 “flash crash,” where US stocks plummeted, also revealed exploitable market design quirks.

The increasing number of electronic markets and participants, coupled with the proliferation of AI, lowers the barrier for malicious actors. IMR intends to use AI to model markets, analyze protections, and pinpoint potential weak points. The focus is on actors seeking disruption and instability, rather than solely financial gain.

DARPA wants performers to use large language models to create computer models of market operations based on regulatory filings and technical specifications. These models should not only test market resilience but also generate specific examples of potential failures, enabling users to identify weaknesses and propose solutions. “We’re not just testing,” Wilding stated, “We’re actually looking at it and analyzing it.”

The initiative reflects a broader national security concern that future attacks may target digital infrastructure and markets, rather than traditional military assets.