Rehn at the ESRB: AI debt is a stability risk, and any EU safe asset must pass three tests

Victoria Shinder11 October 2026, 09:393 min read

Olli Rehn, Governor of the Bank of Finland and First Vice-Chair of the European Systemic Risk Board (ESRB), opened the ESRB's 10th annual conference in Frankfurt on 2 October, marking 15 years since the macroprudential body was created; the BIS republished the speech on 7 October. Rehn, who as a European Commissioner prepared the legislation founding the ESRB, used the occasion to list the risks he thinks the board should watch — and to put a contested idea, a European safe asset, on the macroprudential agenda.

Risks on the list.

• AI and cyber. In July the ESRB warned that frontier AI models could raise the speed, scale and sophistication of cyberattacks, even if they also help defence.
• An AI valuation correction. Investment in computing capacity, chips and energy infrastructure "increasingly relies on debt, including complex financing arrangements". A sharp correction in AI-related valuations, Rehn said, could spread through equity and credit markets, and supervisors need to understand better where those exposures sit.
• Public debt. High and rising debt across developed economies, higher borrowing costs and limited fiscal room could raise sovereign risk; he called for sustained fiscal consolidation.
• Energy and rates. Citing the ECB's September projections — euro-area growth of 0.9% this year and 1.4% in 2027, inflation falling from 3.0% this year to 2.1% in 2028 — he said soaring energy prices bring the outlook closer to the ECB's adverse inflation scenario, while higher long-term rates will slow growth and damp the pass-through to prices and wages.

The investment case. Rehn framed Europe's needs as a "triple test" — defence, energy, productivity — and argued Europe has the savings but lacks an integrated market to channel them: households save nearly 15% of income and hold some €10 trillion, about 70% of their savings, in bank deposits. A long investment cycle driven by AI, the energy transition and defence could, he suggested, eventually raise the equilibrium real interest rate, while history shows markets can overestimate a technology's immediate returns.

A safe asset, with conditions. Rehn said a well-designed common safe and liquid asset could deepen markets, provide a pricing benchmark and collateral usable across member states, and act as a safe haven in stress. But he set three tests that any design must pass within the EU treaties' no-bailout framework: it must preserve incentives for fiscal discipline, distribute costs and benefits fairly enough to satisfy every member state, and avoid new risks to national bond markets. None of the current proposals — common issuance, pooled national debt, structures separating safer and riskier claims — passes all three, he said, so the way forward is to combine elements. He noted that bonds of the Commission, the EIB and the ESM, though top-rated, still yield more than German Bunds.

What he did not claim. Rehn stressed that settling fiscal integration and risk-sharing is not the ESRB's job; its role is to analyse financial-stability trade-offs for policymakers. The speech contains no ESRB recommendation and no new measure.

Source: BIS, Reinforcing Europe's financial resilience – and growth potential, speech by Olli Rehn, Frankfurt, 2 October 2026 (published 7 October) — https://www.bis.org/speeches/20261007-reinforcing-europes-financial-resilience-and-growth-potential