The Bank for International Settlements warns that financial fragility could amplify the impact of the bursting of the AI bubble and inflation.

The Bank for International Settlements warned that the bursting of the artificial intelligence bubble, inflation, and fiscal pressures are among the most significant risks threatening global prosperity. The institution, headquartered in Basel, listed a series of "pressure points" that currently need attention in its annual report released on Sunday, noting that hidden financial vulnerabilities could be amplified when the shock comes. Officials of the Basel Accords stated in the report: "The global economy is still in a state of progress and risks, with resilience under increasing pressure and testing." The assessment report highlights AI-related risks, with its release coinciding with the European Central Bank's annual three-day symposium in Sintra, where global policymakers will also focus on similar financial stability risks. The Bank for International Settlements stated, "If returns on investment are lower than expected, it could trigger sudden withdrawal of financing, turning a capital expenditure boom into a long-term investment slump, and having a chain effect on the financial environment." The report also pointed out that "compared to the past, significant stock market adjustments today could have greater macroeconomic impacts."