The Bank for International Settlements (BIS) warned in its annual report published on Sunday (Jun 28) that an AI investment bust could disrupt credit markets with severity comparable to the 2008 global financial crisis.
Officials listed AI-led risks alongside inflation and fiscal stress as “pressure points” that “demand attention,” with underlying financial vulnerabilities that could amplify any shock.
“Disappointment in returns could trigger a sudden pullback in financing and turn the capital expenditure boom into a protracted investment bust, with potential knock-on effects on financial conditions,” the BIS said. It added that “a major equity-market correction could have larger macroeconomic consequences today than in the past.”
On AI specifically, officials highlighted vulnerabilities linked to funding, including complex arrangements such as so-called “circular financing” deals that can mix equity and debt with supplier-client contracts.
For instance, chipmakers and hyperscalers take stakes in AI labs or neocloud providers, who in turn commit to multiyear purchases of chips or computing power, the BIS said. Data-centre construction is more frequently outsourced to third parties that lease facilities back to hyperscalers on long-term contracts with embedded exit clauses.
“The terms of such deals are typically poorly disclosed, with risks of the same asset being pledged multiple times,” officials wrote.
The BIS warned that repricing of risk, “whether triggered by higher interest rates or an AI bust, has the potential to be similarly disruptive” to credit markets as the 2008 global financial crisis.
The report arrived on the eve of the European Central Bank’s annual symposium in Sintra.