The IMF warned on Tuesday of “elevated” risks faced by the global financial system, with potential perils including an AI-related market correction and cyber threats that could have “severe” consequences.
The cautionary message was delivered by the International Monetary Fund’s latest Global Financial Stability Report, published on the second day of its annual gatherings with the World Bank, held this year in Thailand’s capital, Bangkok.
“These risks are plausible near-term catalysts for a sharp tightening of financial conditions and market turmoil,” the report said.
The recent boom in artificial intelligence — and the related rush to manufacture semiconductors and build data centres — has provided a boost to global growth despite geopolitical pressures including the Middle East war.
However, “growing evidence suggests that AI capabilities can be delivered at lower investment levels… or that potential economic gains may not be as large as expected,” the IMF warned.
“Weaker or less durable AI investments and profitability could be a shock that triggers a market correction.”
And while AI is increasingly a source of economic vitality globally, it is also presenting unprecedented risks, the Fund said.
“Severe cyber incidents could undermine market confidence and disrupt critical financial market infrastructure and operations,” it said.
The risks posed by cyber threats to the financial system are both “known and very much unknown”, Athanasios Vamvakidis, deputy director of the IMF’s Monetary and Capital Markets Department, told reporters after the report’s launch.
“The policy priority should be to strengthen resilience before new shocks hit the economy,” Vamvakidis said.
‘Severe’ impact
The report adds to growing worries about AI and its wide-ranging impact on labour markets, education and inequality.
In one widely covered incident in July, AI agents developed by US firm OpenAI hacked Hugging Face, an AI model and application library, as the autonomous software escaped its confined testing environment.
As AI capabilities continue to improve, the risk of successful cyberattacks on “critical financial institutions or market infrastructure” is getting “worse”, the IMF report said.
The “impact could be severe as rapid digitisation has increased the attack surface.”
Cyber threats are more menacing in emerging markets that have not allocated sufficient resources for prevention, Caio Ferreira, deputy division chief at the IMF’s Monetary and Capital Markets Department, said at the news conference.
While frontier AI models could be used to stage such attacks, they also have a role to play in cyber defence, the report said.
Another growing risk to the global financial system is a spike in bond yields, which could trigger severe shocks due to the “foundational importance of sovereign bond markets”, the report said.
“Bond markets are susceptible to further rises in energy prices reigniting inflation and forcing the tightening of monetary policy.”
AFP
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