AI in action · Regulation
Two Central Bankers in Dublin: An AI Correction Is Possible
Central Bank of Ireland Governor Gabriel Makhlouf said on November 2 that an AI market correction "would not be a surprise". The ECB's Boris Vujčić named AI valuations a top risk.
Two senior central bankers used the same Dublin conference on Monday, November 2, to say out loud what equity markets had spent the previous fortnight pricing in. Opening the Central Bank of Ireland's fifth Financial System Conference at Croke Park, Governor Gabriel Makhlouf said that "a market correction would not be a surprise", noting that corrections have followed earlier infrastructure booms too. Speaking at an event in Ireland the same day, ECB Vice-President Boris Vujčić told Reuters that stretched AI stock valuations are one of the three main risks the ECB sees to financial stability.
Makhlouf was specific about why. He pointed to "the sheer size of the buildout", "the scale of the debt financing driving these investments" and "the circularity of some of the financing", the arrangements in which chipmakers, cloud providers and AI developers invest in one another and then buy from one another. Parts of the picture, he said, look "uncomfortably familiar". He did not put a number or a date on any correction; the point was that a supervisor should treat one as a scenario, not as a surprise.
Vujčić's version was framed around Europe's exposure. While the ECB was preparing its next Financial Stability Review, he said, "we saw the correction in the markets in AI (stocks)", and "everybody's exposed to that... including Europe", because many investment funds hold AI-linked positions. The other two risks he named were stress in government bond markets, where he said the answer to a fiscal problem "has to be primarily the fiscal reaction", and possible losses at investment funds and other non-banks. The review itself is due on November 18.
Makhlouf also spoke as a supervisor of firms that use the technology. "The vast majority of firms we regulate are already using AI", he said, from machine learning to generative and agentic AI, and about half of the engagements at the bank's Innovation Hub now concern AI, up from about one in five a few years ago. His line on responsibility was unambiguous: AI tools can be powerful, but "it is humans who deploy them and therefore humans who remain accountable and responsible for them". The bank's third innovation sandbox, themed "Advancing AI for Consumer Good", opens for applications in January.
Put together, the two speeches show the two ways AI now reaches a central bank's desk: as an asset-price risk that euro-area funds and investors hold through US technology stocks, and as a technology inside the firms the bank supervises. The November 18 review will show how much weight the ECB gives the first one in writing.
Sources: Central Bank of Ireland — Speech by Governor Gabriel Makhlouf at the Financial System Conference (Nov 2, 2026); Reuters via Global Banking & Finance Review — ECB flags AI valuations, bond stress and fund losses as main risks (Nov 2, 2026)