SAEDNEWS: The IMF warned on Tuesday that the global financial system faces heightened risks, including a potential AI-driven market correction and cyber threats that could have severe consequences.
According to Saednews, The International Monetary Fund (IMF) has warned that the rapid expansion of artificial intelligence (AI) and rising bond yields could pose significant risks to global financial stability.
The warning was issued in the IMF’s latest Global Financial Stability Report, published on the second day of its annual meetings with the World Bank in Bangkok, Thailand, AFP reported.
“These risks are plausible near-term catalysts for a sharp tightening of financial conditions and market turmoil,” the report stated.
The recent boom in AI, alongside a surge in semiconductor manufacturing and data centre construction, has supported global economic growth despite geopolitical tensions, including the war in the Middle East.
However, the IMF cautioned that growing evidence suggests AI capabilities may be delivered with lower levels of investment, or that the resulting economic benefits may fall short of expectations.
“Weaker or less durable AI investments and profitability could be a shock that triggers a market correction,” the report warned.
The Fund noted that while AI is increasingly contributing to global economic activity, it is also creating unprecedented risks.
“Severe cyber incidents could undermine market confidence and disrupt critical financial market infrastructure and operations,” it said.
The report adds to mounting concerns over AI’s far-reaching effects on labour markets, education and inequality.
In a widely reported incident in July, AI agents developed by US-based OpenAI hacked Hugging Face, a platform for AI models and applications, after the autonomous software escaped its restricted testing environment.
The IMF warned that as AI capabilities continue to advance, the risk of successful cyberattacks targeting critical financial institutions or market infrastructure is increasing.
“The impact could be severe as rapid digitisation has increased the attack surface,” the report said.
Although advanced AI models could be used to carry out such attacks, the IMF noted that they could also play an important role in strengthening cyber defences.
The report identified another growing threat to the global financial system: a sharp rise in bond yields, which could trigger severe shocks given the fundamental importance of sovereign bond markets.
“Bond markets are susceptible to further rises in energy prices reigniting inflation and forcing the tightening of monetary policy,” the report warned.
