Federal Reserve survey finds AI is the top risk to the financial system
A Federal Reserve survey released Friday found that threats from artificial intelligence now rank as the top danger to the financial system, well ahead of every other risk cited by respondents. In the central bank’s twice-yearly look at vulnerabilities, 87% of market participants, economists, analysts and institutional sources called AI a “salient risk,” up from 50% in the spring survey. The next most-cited danger was a risk-asset correction, named by 52%. Other leading concerns were higher long-term rates (48%), cyberattacks (43%) and fiscal debt sustainability (43%), the last of these against U.S. debt above $40 trillion and a budget deficit near $2 trillion.
Respondents highlighted three distinct AI-related worries: elevated equity valuations and the chance that weaker-than-expected earnings could trigger a market correction; cybersecurity threats from sophisticated state actors or from damage caused by frontier AI models themselves; and risks tied to complex AI-related financing. The report covers views gathered through Oct. 28, days before the U.S. midterm elections. CNBC noted that Wall Street remains uneasy about high-flying AI hyperscalers, while communities are watching the spread of data centers; 56% of voters in this month’s midterms said data centers were of crucial or major importance in their choices, according to exit polling.
Aside from those stresses, the Fed found the financial system fairly stable, though it flagged hedge-fund leverage at its highest since 2013 and concentrated among a relatively small group.
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