Kansas City Fed President Schmid Calls for Assessing AI Systemic Risks — Channel NewsAsia

In the United States, Kansas City Federal Reserve Bank President Jeff Schmid said it is important for the Federal Reserve System to determine whether the network of companies and contracts forming around artificial intelligence is becoming too big to fail. This was reported by Channel NewsAsia.

AI ecosystem

Schmid raised the issue amid the development of the artificial intelligence industry and the construction of data centers. According to him, the Federal Reserve must understand whether an AI ecosystem is taking shape that, because of its scale, could become too important to the economy to be allowed to fail.

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The official also questioned whether there is anything in this system that could be systemically significant. He stressed the need to understand its internal structure.

Financial crisis context

Schmid mentioned the financial crisis of 2007–2009, when large financial institutions required government support because of their scale and impact on the broader economy. He made this comparison while explaining why the Federal Reserve should assess the structure of companies and contracts in the AI sector.