John Fell is the Deputy Director General for Macroprudential Policy and Financial Stability at the European Central Bank, specializing in systemic financial risks. He discusses the current state of financial stability amidst easing trade tensions, but emphasizes lingering uncertainties. The conversation navigates the complexities of the potential AI bubble, highlighting stretched valuations and investment risks. Fell warns about the misnomer of stablecoins and their liquidity threats, underscoring the interconnectedness of traditional finance and private credit expansion.
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insights INSIGHT
Trade Agreement Has Eased Uncertainty
Global trade-policy uncertainty has eased since the US-EU tariff agreement, reducing some financial stability risks.
John Fell says overall uncertainty is lower but sources of risk and vulnerabilities remain elevated.
insights INSIGHT
AI Investments Show Bubble Symptoms
Bubbles are hard to identify because they often begin with genuine technological trends like railroads or electrification.
John Fell flags stretched valuations, industry concentration, circular funding, and leverage as worrying symptoms around AI.
insights INSIGHT
Adoption Determines AI's Payoff
The ultimate test for AI investments is broad adoption and whether future returns justify the infrastructure costs.
Fell stresses uncertainty about AI becoming a general-purpose technology and about future returns.
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When it comes to the risks to financial stability, things seem to have settled down a bit. But with trade tensions, an unpredictable US economic policy, geopolitical issues, a potential AI bubble and the rise of stablecoins, there is plenty to keep an eye on.
Has the global environment really become less uncertain? And how do all these factors impact financial stability?
To explore these questions and more, our host Paul Gordon speaks with financial stability expert John Fell.
The views expressed are those of the speakers and not necessarily those of the European Central Bank.
Recorded on 24 November 2025 and published on 27 November 2025.
In this episode:
01:25 How stable is the financial system?
The EU and the United States reached a trade agreement, and the economic impact of trade uncertainty has been milder than expected. But the full effects of the policy changes are yet to be seen. So, what does this mean for financial stability?
04:14 Is there an AI bubble?
The term “AI bubble” is on everyone’s lips right now . But bubbles are hard to identify and even harder to differentiate from legitimate growth. So, are valuations stretched? What about market concentration and circular funding in the AI industry? And how exactly are companies funding investment in AI?
06:15 If there is a bubble, what could cause it to burst?
There is significant leverage behind AI investments. Returns will largely depend on how widely AI is adopted. Could AI become a general-purpose technology, like the railways did?
08:15 What about the rise of private credit?
How do private credit markets differ from equity financing? Why are risks to euro area financial stability increasing as private markets expand? And how does all this relate to systemic risk in the banking sector and the build-up of AI infrastructure?
11:23 Are stablecoins really stable?
Despite what the name suggests, stablecoins carry liquidity run risks that could affect financial stability. With rapid growth and increasing links to traditional finance, what risks does this innovation create?
15:11 What’s the situation for government financing?
Governments have made progress in reducing debt levels since the pandemic. But in some euro area countries, debt remains too high and pressures to increase spending – for instance on defence – are rising. While this poses one of the biggest risks to financial stability, it could also be an opportunity for long-term growth if properly managed.
18:07 What about banks?
Given the potential AI bubble, questions around the sustainability of government budgets and the rise in stablecoins, where does this leave euro area banks? Profitability is strong and non-performing loan ratios are historically low. So, how is the banking sector doing overall?
20:13 Our guest’s hot tip
John Fell shares his hot tip with listeners.
Financial Stability Review at a glance https://www.ecb.europa.eu/press/financial-stability-publications/fsr/html/index.en.html
Financial Stability Review, November 2025 https://www.ecb.europa.eu/press/financial-stability-publications/fsr/html/ecb.fsr202511~263b5810d4.en.html
Chip War, Chris Miller https://www.amazon.de/-/en/Chip-War-Worlds-Critical-Technology/dp/1982172002
The ECB Podcast 
