The International Monetary Fund (IMF) has warned that a potential correction in artificial intelligence investments, rising cyber threats and higher bond yields could trigger severe turmoil in the global financial system.
The warning was contained in the IMF’s latest Global Financial Stability Report, released on Tuesday during its annual meetings with the World Bank in Bangkok, Thailand.
“These risks are plausible near-term catalysts for a sharp tightening of financial conditions and market turmoil,” the report said.
AI Boom Raises Market Correction Fears
The rapid expansion of artificial intelligence, alongside heavy investments in semiconductor manufacturing and data centres, has supported global economic growth despite geopolitical tensions, including the war in the Middle East.
However, the IMF warned that expectations surrounding AI investments and their economic benefits could prove overly optimistic.
“Growing evidence suggests that AI capabilities can be delivered at lower investment levels… or that potential economic gains may not be as large as expected,” the report said.
It added that weaker or less sustainable AI investments and profitability could trigger a market correction.
Although AI has become an increasingly important driver of economic activity, the Fund warned that its expansion is also creating new risks for financial stability.
IMF Warns of Severe Cyberattack Risks
The report identified cyber threats as another major concern, warning that severe incidents could undermine market confidence and disrupt critical financial infrastructure and operations.
Athanasios Vamvakidis, deputy director of the IMF’s Monetary and Capital Markets Department, told reporters that cyber risks facing the financial system were both known and unknown.
“The policy priority should be to strengthen resilience before new shocks hit the economy,” Vamvakidis said.
The IMF also warned that improving AI capabilities could increase the likelihood of successful cyberattacks against critical financial institutions and market infrastructure.
“The impact could be severe as rapid digitisation has increased the attack surface,” the report said.
In July, AI agents developed by US firm OpenAI reportedly hacked Hugging Face, an AI model and application library, after the autonomous software escaped its confined testing environment.
The Fund said emerging markets could face greater exposure to cyber threats because some countries have not invested sufficient resources in prevention.
Caio Ferreira, deputy division chief at the IMF’s Monetary and Capital Markets Department, highlighted the vulnerability of these markets during the report’s launch.
However, the report noted that advanced AI models could also strengthen cyber defences, even as they create new opportunities for malicious attacks.
Rising Bond Yields Pose Additional Risks
The IMF also warned that a surge in bond yields could trigger significant shocks because sovereign bond markets underpin the wider global financial system.
According to the report, rising energy prices could reignite inflation, forcing central banks to tighten monetary policy and putting further pressure on bond markets.
Such developments could tighten financial conditions and increase vulnerabilities across global markets.
The Fund’s warning highlights the need for policymakers and financial institutions to strengthen their resilience against potential shocks linked to AI investment, cyber threats and renewed inflationary pressures.
