BIS chief warns AI boom’s opaque financing poses financial stability risks

The head of the Bank for International Settlements cautioned on Thursday that the rapid expansion of artificial intelligence is creating new risks for global financial stability, with spending on AI infrastructure now large enough to shape macroeconomic conditions worldwide.

Speaking at the Global Fintech Fest 2026 in Mumbai, BIS General Manager Pablo Hernández de Cos said the AI investment wave is increasingly being financed through debt and private credit rather than corporate earnings, with much of the funding remaining "opaque and interconnected."reuters+1

A Trillion-Dollar Boom Under Scrutiny

The BIS estimates the world's five largest technology firms will invest more than $1 trillion in AI between 2025 and 2026, while industry forecasts suggest global AI investment could grow from roughly $500 billion now to as much as $4 trillion by 2030. Hernández de Cos said the sheer scale of the spending spree warranted close monitoring by policymakers and central banks alike.bis+1

He drew attention to what he described as "circular financing" arrangements, in which chip manufacturers and hyperscalers take equity stakes in AI companies that, in turn, commit to purchasing chips and computing capacity. Such structures create interconnected exposures that are difficult to observe and value, he said.bfsi.economictimes.indiatimes

"The promise of AI is real," Hernández de Cos said, while cautioning that its long-term impact would depend on policy choices, investment in skills and infrastructure, and how widely the benefits are shared.reuters

Echoes of Past Manias

According to Bloomberg, Hernández de Cos reiterated a warning delivered by the BIS in June, observing that investors' hopes pinned to the technology have driven "elevated" stock valuations based on "ambitious expectations." He drew parallels with the canal mania of the 1830s, the British railway mania of the 1840s and the dotcom surge of the late 1990s, while stressing he was not predicting a similar correction.bloomberg+2

"I do not say that this is where the AI boom must lead," he said. "But the scale and speed of the current investment boom, and the weight of expected commercial returns, do warrant some caution."reuters

Productivity Gains and Emerging Risks

The BIS speech was not solely cautionary. Hernández de Cos cited studies showing generative AI delivers productivity gains of between 10% and 65% in specific tasks, with the strongest results in finance, professional services and information services. Current estimates suggest AI could raise total factor productivity growth by about half a percentage point per year, depending on adoption pace.kfgo+1

Still, he warned that job losses, though limited so far, are emerging in customer service, programming and administrative roles, making retraining increasingly urgent. He also flagged cybersecurity as a growing concern, noting that AI simultaneously strengthens defenses and empowers attackers, and called for greater international cooperation among central banks to address the threat.bfsi.economictimes.indiatimes