AI rockets to top of worries about financial system in latest Fed survey

The Federal Reserve says artificial intelligence has become the most frequently cited risk to US financial stability, as concerns grow about rapid investment in the sector and the financing behind it. The shift matters because a slowdown in AI earnings or a market correction could affect investors and firms well beyond technology.

In the Fed’s September and October survey, 87 per cent of respondents named AI as a salient risk, up from 50 per cent in May. Other concerns included a broad correction in risky assets (52 per cent), higher long-term interest rates (48 per cent), cyberattacks (43 per cent) and government debt sustainability (43 per cent). AI-related advanced computing debt issuance reached $680 billion by October, five times the total for all of 2023; the Fed also said related debt, guarantees and future leases could exceed $3 trillion, creating complex links that warrant close monitoring.