Makhlouf warns AI financing amplifies financial stability risks
Gabriel Makhlouf, Governor of the Central Bank of Ireland, warned in Dublin that debt-funded AI investment raises financial stability risks. The Bank will open applications in January for its third sandbox programme, Advancing AI for Consumer Good.
AI investment meets leverage
At the fifth Financial System Conference, Makhlouf cited stretched valuations, debt financing and circular funding as risks surrounding AI investment.
Data centres and semiconductor production support Irish growth, while skills bottlenecks complicate labor market adjustment.
Most regulated firms already use AI.
Supervisors are examining cyber resilience, critical services, business models, consumer protection and financial crime; humans remain accountable for deployment.
AI now accounts for around half of Innovation Hub engagements, up from one in five a few years ago.
The sandbox will target vulnerable consumers, fair and explainable automated decisions, fraud prevention and accountability as AI agents move from advice to execution.
Five priorities for tokenised finance
A tokenisation feedback statement sets five priorities: Eurosystem central bank money settlement and collateral eligibility, including Pontes and Appia; legal clarity with the Department of Finance under Ireland for Finance Strategy – Vision 2030; a tokenisation access point and policy sprints; stronger on-chain and macro-financial analysis; and common standards to prevent fragmentation.
Makhlouf said consumer benefits, commercial viability and resilience under stress remain uncertain.
The work follows feedback from banks, asset managers, digitally native firms and infrastructure operators.
Technology neutrality has limits
Makhlouf said technology neutrality does not mean ignoring technology.
The Bank will deepen its capacity to evaluate AI systems while keeping humans accountable for their use.
For tokenisation, its priorities combine settlement in central bank money with legal clarity and safeguards against fragmentation.
Source: Economic transitions - technology
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