The International Monetary Fund has warned of elevated risks to the global financial system, citing the possibility of an AI-related market correction, severe cyberattacks and a surge in bond yields.
The warning came in the IMF’s latest Global Financial Stability Report, published on Tuesday during its annual meetings with the World Bank in Bangkok, Thailand.
“These risks are plausible near-term catalysts for a sharp tightening of financial conditions and market turmoil,” the report said.
The AI boom, fuelled by investment in semiconductors and data centres, has supported global growth despite geopolitical pressures, including the war in the Middle East.
However, the IMF warned that AI capabilities could be delivered with less investment than expected, while the potential economic gains might also fall short of forecasts.
“Weaker or less durable AI investments and profitability could be a shock that triggers a market correction,” the report said.
The fund also warned that increasingly sophisticated cyber threats could undermine confidence and disrupt critical financial infrastructure.
“Severe cyber incidents could undermine market confidence and disrupt critical financial market infrastructure and operations,” it said.
Athanasios Vamvakidis, deputy director of the IMF’s Monetary and Capital Markets Department, told reporters that cyber risks to the financial system were both “known and very much unknown”.
“The policy priority should be to strengthen resilience before new shocks hit the economy,” he said.
Cyber risks and bond yields
The IMF warned that the risk of successful cyberattacks on critical financial institutions and market infrastructure was worsening as AI capabilities advanced and financial systems became more digitised.
“The impact could be severe as rapid digitisation has increased the attack surface,” the report said.
Caio Ferreira, deputy division chief at the IMF’s Monetary and Capital Markets Department, said emerging markets were particularly vulnerable where resources for cyber defence were insufficient.
The report added that advanced AI models could be used to carry out cyberattacks but could also help strengthen defences.
Another major risk is a rise in bond yields, which could trigger significant shocks because sovereign bond markets underpin the global financial system.
The IMF warned that higher energy prices could reignite inflation and force central banks to tighten monetary policy, putting further pressure on bond markets.
