BIS Chief Warns AI Investment Boom Risks Financial Stability
Pablo Hernandez de Cos warns that opaque debt funding the AI investment boom could create systemic financial vulnerabilities if commercial returns fail to meet expectations.
The head of the Bank for International Settlements, Pablo Hernandez de Cos, warned that the rapid expansion of artificial intelligence is introducing new risks to global financial stability. Speaking at a conference hosted by the Reserve Bank of India, Hernandez de Cos stated that AI investments are increasingly funded through private credit and opaque debt rather than corporate earnings, creating potential vulnerabilities if profits do not materialize as expected.
The Bank for International Settlements estimates that the five largest technology firms will invest more than $1 trillion in AI between 2025 and 2026, with total global investment potentially reaching $4 trillion by 2030. While Hernandez de Cos acknowledged that generative AI could increase productivity by 10% to 65% for specific tasks, he noted that the long-term economic outcome depends on labor reallocation and policy decisions.
Regarding global distribution, Hernandez de Cos indicated that while advanced economies are likely to see initial benefits, India possesses a significant opportunity to close the technological gap using its existing digital public infrastructure.
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