Kansas City Fed warns of long-term AI financing risks
Highly leveraged entities may cause financial stress to spill over to broader economy
The Federal Reserve Bank of Kansas City has called for greater transparency from financial institutions and artificial intelligence firms to prevent longer term financial instability.
Kansas City Fed economists Padma Sharma and Pierce George discuss the long-run effects of the AI build-out in an article published on October 5. Sharma and George say the choice of debt rather than equity to finance the build-out increases the risk that financial stresses could spill over to the broader economy
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