TL;DR
John Schindler, secretary-general of the Financial Stability Board, has told Politico that global finance could be in an AI overvaluation bubble comparable to the dotcom boom and the run-up to 2008. Asked whether the industry has enough safeguards to stay stable if it unravels, he said: “I do hope so.”
His framing is historical rather than predictive. “We know at the dotcom period that those asset valuations — very eager to catch the latest technology, the latest darling of the markets — led to some exuberance. We saw this in the housing price bubble before the great financial crisis. We might be seeing that now.”
The numbers behind the concern are large. Goldman Sachs research puts the market value gained by AI-related companies at roughly $27 trillion since November 2022, and Nvidia became the first $5 trillion company last year. The FSB’s worry is concentration: bets clustered in a handful of very large firms, where a correction could propagate through hedge fund leverage and bank exposures into a broader shock.
Schindler declined to forecast. “I’m not a stock market prognosticator,” he said, while noting the valuations look stretched. He pointed to the nonbank sector — far larger than in 2008 and less regulated — as the area hardest to assess: “There could be build-ups of risk in parts of that sector that it’s harder for us to assess. So, I can’t say it will all be fine.”
He also flagged leverage in AI asset purchases: “If it’s just mom and pop putting $100 in the stock market, that’s one thing. If it is mom and pop leveraging that ten times over, that’s something else.”
Looking Forward
The UK relevance is direct rather than incidental. The FSB is chaired by Andrew Bailey, who is also Bank of England governor and has warned repeatedly about an AI price correction — so this is the institution’s secretariat and its chair saying the same thing from different chairs. It also lands while UK policymakers are actively encouraging retail investors out of cash and into equities. The Bank for International Settlements has warned of a “protracted investment bust” and the IMF of a contraction if profitability disappoints; this week’s chip selloff gives those warnings a shorter timescale than they had a month ago.