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BIS Flags Rising Risks From Debt, AI Boom and Fragilities
The BIS annual report warns that high public debt, the AI boom's uncertain path and hidden financial fragilities are compounding global risks for policymakers.
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The Bank for International Settlements warned that global risks are mounting from high public debt, the sustainability of the artificial-intelligence boom and a build-up of financial fragilities that could amplify the next shock. The warning came in the BIS's annual economic report, released Tuesday.
The Basel-based institution, often called the central bank for central banks, said the combination of stretched asset valuations, elevated leverage in parts of the financial system and the uncertain trajectory of AI investment created a fragile backdrop for policymakers. Fiscal positions in many advanced economies have deteriorated since the pandemic, leaving less room to absorb future downturns, the report said.
On AI, the BIS flagged the risk of a boom-bust cycle as capital pours into a technology whose long-term productivity gains remain unproven. "The current wave of innovation carries large uncertainties," the report stated. "Financial markets may be overestimating the near-term impact while underestimating the structural changes needed."