The International Monetary Fund (IMF) has warned that a potential correction in artificial intelligence (AI) investments, rising government borrowing costs, and increasingly sophisticated cyberattacks could destabilise global financial markets if policymakers fail to address mounting vulnerabilities.
In a report published on Tuesday, October 13, 2026, the IMF said financial markets had remained resilient amid economic growth and strong corporate earnings, but cautioned that excessive borrowing, stretched asset valuations, and growing links between financial institutions could amplify future shocks.
In its assessment, the IMF identified three major risks, including a sharp decline in AI-related asset prices, further increases in sovereign bond yields, and cyberattacks targeting critical financial infrastructure.
“High borrowing, scarce liquidity, and tighter links across markets could amplify the impact into broader financial stress,” the fund said.
The warning comes as AI investment continues to support global economic activity, particularly through spending on data centres, semiconductors and computing infrastructure.
However, the IMF cautioned that investor expectations could prove unsustainable if companies fail to deliver the productivity gains and profits markets anticipate.
The fund said its review of 14 circular financing transactions involving AI companies since 2023 identified approximately $300 billion in equity investments and $650 billion in debt, linked to $1.4 trillion in future revenue commitments.
It warned that weaker-than-expected earnings or financial difficulties at major companies could undermine revenue projections, reduce investment valuations and threaten the ability of borrowers to service their debts.
Reuters also reported that hyperscale technology companies now account for about 10 per cent of global investment-grade bond issuance, up from less than one per cent in 2024, highlighting the sector's growing importance in credit markets.
The IMF warned that rising sovereign bond yields could raise borrowing costs for governments and trigger losses across financial markets.
Higher yields can reduce the market value of existing bonds, weaken collateral used to secure loans and expose highly leveraged investors to losses. These pressures could spread to banks, pension funds, insurers, and other financial institutions that hold government securities.
Renewed inflationary pressures, higher energy prices, and concerns about public finances have increased the risk of further rises in borrowing costs.
“As government bonds underpin the global financial system, the consequences of higher sovereign yields could extend well beyond public debt,” the fund said.
In its October 2025 Global Financial Stability Report, the IMF similarly warned that stretched asset valuations, pressure on sovereign bond markets and the growing influence of non-bank financial institutions could reinforce one another during periods of market turmoil.
The fund also raised concerns about cyberattacks targeting banks, payment networks, cloud providers and software platforms supporting financial services.
Such incidents could disrupt payments, trading, and access to deposits, potentially spreading beyond individual institutions because they depend on shared technology providers.
IMF reported that in more than 70 per cent of reported cases so far in 2026, software providers had almost no time to patch vulnerabilities before attackers exploited them. This was more than double the proportion recorded in 2021, when providers typically had close to 300 days to address vulnerabilities.
The fund has previously warned that artificial intelligence could accelerate the discovery and exploitation of software vulnerabilities, increasing the speed and scale at which cyber risks spread across interconnected financial systems.
The IMF maintained that its stress analysis found that banks representing 22 per cent of global banking assets could fall below regulatory capital requirements under an adverse scenario, up from 18 per cent a year earlier.
It urged governments to put public debt on sustainable paths, curb excessive borrowing and liquidity mismatches in AI and private credit markets, and strengthen cybersecurity through improved incident reporting and resilience testing.
The fund also called on emerging and developing economies to rebuild financial buffers while conditions remain favourable, warning that higher borrowing costs and mounting risks could leave them less prepared to withstand future economic disruptions.