Regulators fear a lending frenzy tied to AI infrastructure could inflate a bubble reminiscent of the early-2000s dot-com crash.
BoE Investigates AI-Linked Lending Risks
The Bank of England (BoE) has launched a probe into the growing trend of financiers lending to data centers as a speculative bet on the artificial intelligence (AI) boom, Bloomberg reported Friday.
The central bank is increasingly concerned that AI-driven credit exposure could create a systemic risk if valuations collapse — drawing parallels to the dot-com crash that erased trillions in market value two decades ago.
Officials are examining how deeply banks and private credit funds are becoming intertwined with AI companies and infrastructure developers, as data-center construction becomes the new frontier for institutional investment.
$6.7 Trillion Infrastructure Demand
While data-center lending remains a niche segment, it is expanding rapidly. According to McKinsey & Co, roughly $6.7 trillion in new investment will be needed by 2030 to meet global demand for AI processing and energy infrastructure.
This explosive growth has made data-center lending one of the few direct avenues for financiers to gain exposure to the AI economy — especially as AI-native stocks remain scarce and tokenized private AI shares have yet to scale.
However, the BoE noted that this lending activity is shifting capital away from hiring and R&D toward infrastructure speculation, with billions now flowing into high-cost construction projects.
Regulators Fear Financial Instability
In a statement Friday, the Bank of England warned that AI-related debt financing could heighten systemic vulnerabilities:
“If the projected scale of debt-financed AI and associated energy infrastructure investment materializes over this decade, financial stability risks are likely to grow.”
The bank highlighted that lenders could face both direct and indirect exposure — from credit to AI companies to financing private credit funds that are heavily invested in AI-related assets.
Such interconnected risk could amplify contagion in the event of a market downturn, similar to how overleveraged bets fueled past financial crises.
Cautious on AI, Harsh on Crypto
The BoE’s scrutiny of AI lending comes as it continues to take a hardline stance on digital assets.
The regulator recently proposed limiting individual stablecoin holdings to between £10,000 and £20,000 ($13,300–$26,600) — a move UK crypto groups called restrictive and costly.
Meanwhile, a survey of 2,000 UK crypto investors found that around 40% reported blocked or delayed payments to crypto providers by traditional banks.
AI Hype Meets Regulatory Reality
As global capital races into AI infrastructure, the Bank of England’s probe highlights growing concern that debt-fueled enthusiasm could overheat the market.
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