Fed's Schmid: Need to understand if AI "ecosystem" getting too big to fail

Kansas City Fed President Jeff Schmid has expressed concern that the rapid growth of the artificial intelligence industry could lead to a situation where the network of firms and contracts becomes so large it is "too big to fail". Comparing this to the need for public bailouts of major financial institutions during the 2007 to 2009 crisis, Schmid emphasized the importance of understanding if the AI ecosystem poses any systemic risks.

He stated that it is crucial to determine whether there are any elements within the ecosystem that could have a significant impact on the broader economy, and whether public intervention may be necessary to prevent a potential collapse. Schmid's remarks come as the AI boom continues to unfold and the industry expands at an unprecedented pace.