Work

When Growth Destroys Collateral: Technological Obsolescence and Macroprudential Risk in the AI Era

Year: 2026

Type: article

Abstract: Schumpeterian growth creates by destroying. A critical financial consequence arises when capital rendered obsolete by innovation also serves as collateral for debt that markets treat as safe. Using the AI infrastructure boom as a case study, this paper documents the scale of investment, the spread of asset-backed and structured finance, and the emergence of investment-grade claims backed by data centres, GPUs, leases, and customer contracts that are increasingly reaching the portfolios of institutional investors. Systemic risk arises not from technological depreciation itself, but from a common collateral revaluation that transforms widely held, information-insensitive claims into information-sensitive ones. Such a shift can trigger screening, abrupt repricing, deleveraging, and fire sales across institutional portfolios. The mechanism echoes a central lesson of the Global Financial Crisis and carries implications for financial supervision, risk assessment, and complementary industrial policy.

Source: The Economists Voice

DOI: 10.1515/ev-2026-0036

Author: Edoardo Gaffeo

Institution: University of Trento

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $2,712