RBA warns AI data debt creates system risks

• The Reserve Bank of Australia warned that debt-funded data centre expansion could introduce financial system vulnerabilities.
• Off-balance sheet obligations reached US$1-$1.5 trillion globally, creating complex interlinkages along supply chains.
• The central bank cited circular financing and debt-driven AI models as key risks to long-term financial stability.

The Reserve Bank of Australia warned that increasing off-balance sheet debt funding for data centres could introduce financial vulnerabilities.

While current domestic financial risks remain contained, analysts estimate one-third of global data centre capital outlay is debt-funded.

"These arrangements predominately reside outside of hyperscalers’ balance sheets at present; however, their financial obligations to these projects are becoming significant, with estimates ranging from US$1 to US$1.5 trillion," said the Reserve Bank of Australia in its financial stability review.

The central bank noted that tech firms use circular financing arrangements, including chipmakers backing neocloud customers who buy their products.

Rapid growth in opaque special purpose vehicles could obscure actual industry debt levels as investment continues.

Data centre construction relies heavily on syndicated loans involving private equity firms alongside domestic and international lenders.

Potential future risks include overinvestment, debt maturity mismatches, and supply commitments made before clear end-user demand emerges.