The Bank of England is scrutinizing a significant increase in lending to data centers, driven by speculative investments in artificial intelligence (AI). This investigation highlights concerns over market risks, with the central bank warning that a correction in the AI sector could mirror the 2000 dot-com bubble if current high valuations are not sustained. The Bank is also examining the dynamics between AI companies and financiers eager to capitalize on the AI boom.
Despite being a niche market, data center lending is projected to expand considerably, with McKinsey estimating a $6.7 trillion investment requirement by 2030 to support AI infrastructure. This shift from hiring to substantial data center investments may prompt future regulatory measures, potentially affecting returns and slowing AI advancements. Concurrently, the Bank's proposal to limit individual stablecoin holdings has met resistance from UK crypto groups, who deem it excessively restrictive. The Bank considers the burgeoning lending trend a potential threat to financial stability, as debt-financed AI and energy projects could heighten financial risks over the next few decades.
Bank of England Probes AI-Driven Data Center Lending Surge
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