The International Monetary Fund (IMF) said in its Global Financial Stability Report published on Tuesday that several concurrent risks — from a correction in artificial intelligence (AI) markets to rising bond yields and growing cyberattacks — threaten global financial stability, and that current market resilience does not equal safety.
Artificial intelligence: correction risk and leverage
The IMF noted that AI investments have so far helped offset the negative effects of the Middle East conflict and broader policy uncertainty. However, there are increasing signs that AI developments may require less investment than previously expected and that the anticipated economic returns could fall short. Athanasios Vamvakidis, Deputy Director of the IMF's Monetary and Capital Markets Department, said at a Bangkok press conference: "An AI market correction would also affect the real economy."
The fund warned that rising leverage in the sector could amplify the impact of any shock by triggering forced sales and higher volatility.
Bond markets: higher yields and changing investor base
The IMF reported that bond-market risks have increased since its April report. Higher energy prices have pushed up government bond yields, while record levels of sovereign debt and unresolved fiscal deficits add further pressure. Vamvakidis expressed concern that large issuances from governments and increasingly from the private sector may have to be absorbed by price-sensitive investors while central banks are shrinking their balance sheets.
The report also highlighted a rapid shift in investor composition: large cloud service providers (hyperscalers) now account for roughly 10 percent of global investment-grade bond issuance, compared with under 1 percent in 2024. The IMF urged policymakers to limit excessive leverage, including through derivatives and leveraged loans.
Cybersecurity: exploited vulnerabilities on the rise
The report released alarming data showing that in 2026, in more than 70 percent of incidents developers effectively had no time to fix vulnerabilities before they were exploited — a 20 percentage-point increase from a year earlier. The IMF noted that while AI can aid defense, it can also make cyberattacks more sophisticated. A major attack on a critical provider or financial institution could undermine confidence and quickly ripple through markets.
Banking sector: stress tests and weak spots
IMF stress tests suggest banks' capital buffers would remain broadly resilient in a hypothetical downturn triggered by an AI slowdown and bond-market stress. Nevertheless, the fund pointed out vulnerabilities: the tests identified weaker capital positions at institutions representing 22 percent of global bank assets, up from 18 percent in the 2025 test.
Recommendations and implications
The IMF urged policymakers to rein in excessive leverage, pursue sustainable public debt trajectories and strengthen cybersecurity. The report underscores that observed market resilience so far does not guarantee safety if an AI market correction occurs, bond-market stress intensifies, or large-scale cyberattacks take place.
Source: Reuters
Note: This article does not constitute investment advice or a recommendation.
