TL;DRThe BIS warned that an AI investment bust could be as disruptive to credit as 2008, flagging circular financing and poorly disclosed risk in its annual report.
The Bank for International Settlements warned on Sunday that an AI investment bust could hit credit markets with disruption comparable to the 2008 financial crisis. In its annual report, the Basel-based institution listed AI-led risks alongside inflation and fiscal stress as “pressure points” that “demand attention.”
“Disappointment in returns could trigger a sudden pullback in financing and turn the capex boom into a protracted investment bust, with potential knock-on effects on financial conditions,” the BIS said. It added that “a major equity-market correction could have larger macroeconomic consequences today than in the past.”
The report singled out what it called “circular financing” as a specific vulnerability. Chipmakers and hyperscalers take equity stakes in AI labs or neocloud providers, who in turn commit to multi-year purchases of chips or computing power from those same investors. Data centre construction is increasingly outsourced to third parties that lease facilities back on long-term contracts with embedded exit clauses. “The terms of such deals are typically poorly disclosed, with risks of the same asset being pledged multiple times,” the BIS wrote. The AI boom’s financial complexity has been escalating through record bond issuance, metered pricing shifts, and export controls that converged in June.
