IMF warns an AI share crash could shake the entire global financial system
Threat of AI share crash puts world financial stability at risk, says IMF
In its twice-yearly Global Financial Stability Report, the IMF flags an AI share price crash as one of three "salient risks" to world financial stability, alongside rising government borrowing costs and a major cyber-attack. It points to sky-high valuations, growing leverage, concentrated exposures, and circular financing deals, warning that a correction could sharply cut investment and spill over globally, with Asian markets most exposed after the US.
The exposure of the rest of the world to US assets, particularly AI, is the highest it has ever been. So this is supporting the global economy through wealth effects today; but if we get a market correction it could have broad implications.