IMF warns AI, bond and cyber risks could unsettle markets

The International Monetary Fund warned Tuesday that a pullback in artificial intelligence investment, a sharp rise in government bond yields or a severe cyber incident could tighten financial conditions and unsettle global markets. The risks could become systemic if they interact with existing vulnerabilities, the IMF said in its latest Global Financial Stability Report. The fund said expectations for AI investment and profits may prove too high. If the technology delivers economic gains with less investment than expected, or returns disappoint, prices of AI-related assets could fall and spread losses to broader markets. Borrowing, concentrated exposures and financial arrangements linking stronger AI companies with weaker businesses could intensify the effects, according to the report. The IMF also warned that rising government borrowing costs could add pressure to public finances and financial markets. Higher energy prices have pushed bond yields up in several advanced economies, the report said, while renewed inflation could lead policymakers to tighten monetary policy.