BIS warns of new risks to financial stability from AI

BIS General Manager Pablo Hernández de Cos spoke at the Global Fintech Fest, emphasizing that AI impacts demand, supply, financial markets, and productivity, making it more challenging for central banks to assess the economy and calibrate their monetary policy.

The BIS estimates that the five largest tech companies are expected to invest over 1,000 billion dollars in AI during the 2025-2026 period. Sector forecasts cited by the institution also estimate global investments in AI at around 500 billion dollars today, with potential growth reaching up to 4,000 billion dollars by 2030.

This surge is accompanied by an increasing reliance on debt and sometimes less transparent private funding. According to the BIS, this trend could heighten the vulnerability of the financial system if the expected returns from AI investments do not materialize or if financing conditions tighten.

The institution had already warned in June that competition among major tech firms could lead to overinvestment similar to past waves of innovation. A sharp correction in valuations or a rapid withdrawal of funding could then transmit shocks to the markets and the real economy.

Productivity gains, but difficult-to-measure effects

The BIS does not dispute the economic potential of artificial intelligence. Pablo Hernández de Cos cited studies showing that generative AI can enhance productivity by 10% to 65% on certain tasks, particularly when assisting employees with writing, analysis, or information processing.

However, these gains are not uniform. The effects depend on the sector, the quality of the models, the available skills, and the ability of companies to reorganize their operations around these new tools. Certain professions, particularly in customer service and software development, may also be more exposed to automation.

For central banks, uncertainty also surrounds the pace at which these gains will diffuse throughout the economy. A sustained increase in productivity can support growth without necessarily causing more inflation, but a very rapid wave of investment can also boost demand, asset prices, and financing needs before production gains become fully apparent.

Central banks urged to monitor AI financing

The BIS General Manager stressed the need to track the connections between AI, credit, financial markets, and global supply chains. Demand for semiconductors, data centers, energy, and specialized equipmentis already redistributing some trade flows toward economies capable of providing these infrastructures.

According to the BIS, advanced economies are expected to be the first to benefit from AI-related gains, but some emerging countries have advantages that could help narrow the gap when they combine digital infrastructure, skills, and access to financing. In Mumbai, Pablo Hernández de Cos cited India as one of the economies likely to benefit from this dynamic due to the scale of its digital infrastructure.