The European Central Bank is considering a targeted review of data center-related loans to assess potential risks from volatility in artificial intelligence market sentiment and valuations. Senior ECB officials have raised the idea internally and in discussions with supervised banks, according to sources familiar with the matter. The proposed review could take the form of on-site inspections focusing on how banks assess future cash flows, collateral values, and provisions for potential defaults. Regulators worldwide are stepping up scrutiny of banks' AI-related exposures as concerns over rising interest rates and growing opposition to data center construction threaten pressure on the rapidly expanding lending sector. However, one source indicated the investigation scope would be narrower than the ECB's previous broad review of leveraged finance, which strained relations between supervisors and banks. The ECB has not yet finalized its specific approach for reviewing data center and broader AI risks.