RBA flags circular AI financing and agent-driven herd trading as stability risks
The Reserve Bank of Australia's half-yearly Financial Stability Review, released Thursday, warned a shift in sentiment toward the AI investment boom, fed by a debt-financing cycle becoming "more opaque and circular," could trigger broader financial fallout. It cited "circular financing," where chipmakers fund neocloud firms that then buy their products, and warned of "herd behaviour and market correlation" as AI agents take a bigger role in investment decisions, on top of AI-driven cyberattack risk.
NoteThis names a transmission mechanism, circular vendor financing that concentrates risk the way it did in past tech cycles, and AI trading agents correlating on the same signals, which gives a sell-off a new way to move faster than regulators are used to.
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