Fed Survey: AI Now the Top Threat to the U.S. Financial System

Artificial intelligence has become the most-cited threat to the U.S. financial system in the Federal Reserve’s latest survey of market contacts, according to the Fed’s semi-annual Financial Stability Report released Friday, Lianhe Zaobao reported.

Some 87% of respondents viewed AI as a significant risk to the financial system, up from 50% in the previous survey released in May, according to Lianhe Zaobao. CNBC said in a post on X that AI risks are the biggest threat to the financial system, according to the Fed survey.

AI risks are the biggest threat to the financial system, Fed survey finds https://t.co/Lg02waH1rx

— CNBC (@CNBC) November 13, 2026

Three worries about AI

Respondents voiced concerns about inflated stock prices and a possible market correction, cybersecurity threats from nation-states and from AI models themselves, and complex AI financing, The Economic Times reported. The report described the third area as risks tied to “complex forms of AI-related financing,” according to The Economic Times.

“Many noted that stretched valuations, circular financing arrangements, and heavy reliance on debt to fund the AI buildout could amplify losses,” the report said, as quoted by The Economic Times.

The survey behind the headline is small. Staff at the Federal Reserve Bank of New York collected responses from 23 contacts at broker-dealers, banks, investment funds and advisory firms during September and October, The Company Chronicle reported. The report states the survey box “should not be interpreted as representing the views of the Federal Reserve Board or the Federal Reserve Bank of New York,” according to The Company Chronicle.

Other risks on the list

A broad correction in risk assets was the second-biggest concern, cited by 52% of respondents, Lianhe Zaobao reported. Higher long-term interest rates were cited by 48%, while cyberattacks and fiscal debt sustainability were each cited by 43%, according to Lianhe Zaobao.

Because the survey ran in September and October, respondents had not yet factored in the recent turmoil surrounding Nvidia and its former CEO Jensen Huang, Lianhe Zaobao reported.

A borrowing boom behind the data centers

Debt issuance linked to data centers and other advanced computing infrastructure surged to $680 billion as of October 2026, five times the total for all of 2023, according to Lianhe Zaobao. That debt now makes up nearly a third of all nonfinancial investment-grade corporate debt issuance, up from less than 6% three years ago, the outlet reported.

“The complex interlinkages among firms engaged in the data center buildout, public credit markets, private lenders, and special purpose financing vehicles create vulnerabilities that necessitate close monitoring,” the report stated, according to Lianhe Zaobao.

The report also said stock valuations remain high, partly because of “market enthusiasm for super intelligence,” The Company Chronicle reported. It noted the buildout is tracking the late-1990s telecom investment cycle relative to GDP, according to the outlet.

System otherwise stable

Outside of AI, the report found the financial system fairly stable, though it noted hedge fund leverage is at its highest since 2013 and concentrated in a relatively small group, The Economic Times reported. Banks were described as sound, with capital near historic highs, The Company Chronicle reported.

Sources

• CNBC on X
• Lianhe Zaobao: Fed report: AI risks now top threat to US financial stability
• The Economic Times: 87% of experts warn of AI risks to financial system, Fed survey finds
• The Company Chronicle: Fed puts AI first among financial risks
• Federal Reserve Board: Financial Stability Report

Reporting by Daily Beltway.