Fed's Schmid: Need to understand if AI "ecosystem" getting too big to fail

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FILE PHOTO: A message reading "AI artificial intelligence", a keyboard, and robot hands are seen in this illustration taken January 27, 2025. REUTERS/Dado Ruvic/Illustration//File Photo
"AI Artificial Intelligence" words, a keyboard and a robotics hand in this illustration taken, September 23, 2026. REUTERS/Dado Ruvic/Illustration

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WASHINGTON, Sept 25 : Kansas City Fed President Jeff Schmid said that as the artificial intelligence boom unfolds it will be important for the Fed to understand if the network of firms and contracts developing in the industry is becoming so large it is too big to fail.

"Where we have to start to really synthesize what's happening in the AI and the data center build-out is are we moving to a too-big-to-fail AI ecosystem," he said, referring to the need for public bailouts of major financial institutions during the 2007 to 2009 financial crisis because of their size and influence on the broader economy.

"You worry a little bit about how do we understand what's inside. ... Is there anything systemic?" he asked.

Source: Reuters

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