Apollo economist warns AI could trigger bank runs via rate sensitivity

Apollo Global Management Chief Economist Torsten Slok warned on Bloomberg Surveillance that artificial intelligence could precipitate bank runs by accelerating capital flight during Federal Reserve tightening cycles. Slok identified AI-induced liquidity crises as an emerging systemic risk alongside traditional housing supply constraints caused by higher interest rates. He argued that algorithmic trading and AI-powered sentiment analysis compress decision-making timelines, potentially overwhelming bank balance sheets before regulators can intervene. The economist highlighted specific economic sectors most sensitive to Fed policy moves as vulnerable flashpoints for AI-amplified volatility. This assessment marks a notable shift where macroeconomists explicitly link AI adoption to immediate financial stability threats rather than long-term productivity gains. Slok’s comments suggest that current banking regulations may be inadequate for managing machine-speed market dynamics. The warning comes as the Federal Reserve continues navigating post-pandemic monetary normalization amid rapid technological integration in financial markets.