(Dec 4): Germany’s financial watchdog warned the country’s banks that they face risks from the increasingly opaque ties between companies driving the artificial intelligence (AI) boom.
“We are currently observing the development of both vertical and horizontal connections which are hard to see into from the outside,” Nikolas Speer, the head of banking supervision at BaFin, said at an online conference on information technology resilience on Thursday.
The comments underscore European regulators’ rising concerns surrounding how AI adoption will further cement lenders’ reliance on foreign tech giants, notably from the US. Earlier this week, the Bank of England warned that a correction in AI stocks could spill over to wider debt markets and pointed to early warning signs in credit default swaps of companies leaning on debt to fund their investments.
BaFin’s Speer cited “an increasing clustering” of the operators of AI models, cloud providers, chipmakers and data centers via shareholdings, the purchase of computing power and other contracts.
“This also creates a concentration risk in the medium term,” Speer said. “It presents you as users with at least the same challenges you are already facing in the use of cloud services.”
Banks will be able to improve the resilience of their operations by implementing new European regulations known as DORA, even if doing so may have occasionally been “cumbersome”, he added.
See also: Meta faces EU antitrust probe over WhatsApp’s AI tools — Bloomberg
Uploaded by Tham Yek Lee
