ECB Considers Targeted Review of Data Center Loans

According to ChainCatcher citing Bloomberg, the European Central Bank is considering a targeted review of loans related to data centers to assess potential risks from shifts in artificial intelligence market sentiment and valuations. Senior ECB officials have raised the idea internally and in discussions with banks under its supervision, according to people familiar with the matter. The review could involve on-site inspections examining how banks assess future cash flows and collateral values, and set aside provisions for potential defaults. The consideration comes as concerns about higher interest rates and growing opposition to data center construction could put pressure on the fast-growing lending sector, while regulators globally are increasing scrutiny of banks’ AI-related risks. The review would be narrower than the ECB’s examination of leveraged finance several years ago, which strained relations between regulators and banks. The ECB has not decided how to review data center lending or broader AI risks.