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

Rising concerns about artificial intelligence (AI) topped a list of financial stability risks revealed in a Federal Reserve report published on November 13. The central bank's Financial Stability Report found that 87% of surveyed respondents cited AI as a significant risk to the financial system, a substantial increase from 50% in the May 2023 survey.

Top concerns surrounding AI included cyberattacks, risks associated with complex forms of AI-related financing, and the potential for an AI earnings slowdown leading to a broader market correction. Other AI-related concerns included higher long-term interest rates and fiscal debt sustainability. The increased focus on AI was underscored by the Fed's examination of rapid debt issuance tied to data centers and advanced computing infrastructure, with such debt reaching $680 billion by October 2023, a fivefold increase from 2023.