According to Bloomberg, the Bank of England is investigating the rise in lenders lending to data centers as a way to speculate on the future of AI.
The UK's top bank is already investigating the market risks that could arise if AI companies fail to achieve high valuations, warning that many could collapse in a correction reminiscent of the dot-com bubble of the early 2000s.
Bloomberg is currently investigating the relationship between AI companies and financiers looking to bet on the AI market, Bloomberg reported on Friday.
Data center financing remains a niche market, but is poised to become a significant source of funding, with an estimated $6.7 trillion needed by 2030 to meet the growing demand to power AI, McKinsey & Company said in April.
sauce: Christophe Barrault
According to Bloomberg, the investigation began after the BOE noticed that funds were being shifted from hiring staff to spending billions of dollars to build data centers.
As there are few AI native stocks available and crypto tokenization of AI private stocks is not ready at scale, >
British crypto organizations have also slammed the BOE's proposal to limit individual stablecoin holdings from 10,000 British pounds ($13,310) to 20,000 British pounds ($26,620), arguing that it is not only restrictive, but also difficult and expensive to implement.
While the BOE said such restrictions would not be imposed permanently, UK banks have also imposed their own measures, with around 40% of the 2,000 crypto investors surveyed saying their bank had blocked or delayed payments to crypto providers.
BOE worries data center loans could cause financial instability
However, the UK's top banks are of the view that these new lending practices require close scrutiny due to their potential impact on financial stability.
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“Financial stability risks are likely to increase if the projected scale of debt-financed AI and related energy infrastructure investments materializes over this decade,” the report said on Friday.
“Banks will be affected by this directly through their credit exposure to AI companies, and indirectly through the provision of loans and lines of credit to private credit funds and other financial institutions that are exposed to asset prices affected by AI.”
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