AI Boom Raises New Financial Stability Risks, BIS Warns
The Bank for International Settlements warns that rapid growth in AI investment could create risks for global financial stability. Spending by major technology companies, rising debt and private-credit financing, market concentration and high valuations may complicate economic forecasting and monetary policy.
AI could also increase productivity while displacing some routine cognitive jobs, making retraining important. The BIS sees potential economic benefits for countries with suitable infrastructure, skills and policies, but says the boom requires careful monitoring.
AI’s rapid expansion is creating new risks for global financial stability, according to Pablo Hernández de Cos, head of the Bank for International Settlements (BIS). He said the scale of investment in AI infrastructure has become large enough to influence broader economic conditions.
The BIS estimates that the world’s five largest technology companies could invest more than $1 trillion in AI during 2025 and 2026. Industry forecasts also suggest that total global AI investment could reach as much as $4 trillion by 2030.
Hernández de Cos said AI is making economies more difficult for central banks to understand because it can simultaneously affect demand, supply, productivity and financial markets. This could make economic forecasting and monetary policy decisions more complicated.
Another concern is how the AI boom is being financed. The BIS official warned that increasing use of debt and private credit to fund AI projects deserves close attention, particularly because some of these financing structures remain opaque and interconnected.
AI is also changing employment patterns. While the technology can significantly improve productivity in areas such as coding, consulting and professional services, there are already signs that some routine cognitive jobs could be displaced. Hernández de Cos emphasized the importance of retraining and developing new skills.
Despite the risks, the BIS does not view AI as purely negative. The technology could deliver major productivity gains and provide economic opportunities for countries that successfully develop infrastructure, skills and supportive policies. However, high valuations, market concentration and large financial commitments mean that the current AI boom requires careful monitoring.
