IMF Warns of AI Market Correction, Cyber Threats

Key takeaways

The IMF warned on Tuesday that an AI market correction, severe cyberattacks and rising bond yields could trigger sharp global market turmoil, urging policymakers to curb excessive leverage and build resilience before new shocks hit.

Conceptual flat-vector illustration of a falling stock-market chart line woven with glowing AI circuit nodes and a cracked shield emblem on a dark navy background — symbolic artwork, not a photograph — Illustration: WHAT TODAY?

The International Monetary Fund warned on Tuesday that the global financial system faces elevated risks, with an artificial-intelligence-driven market correction, severe cyberattacks and a surge in sovereign bond yields all looming as plausible triggers of market turmoil.

The caution came in the Fund’s latest Global Financial Stability Report, released on the second day of its annual meetings with the World Bank in Bangkok, Thailand. According to the report, these risks could sharply tighten financial conditions and cause market turmoil in the near term.

The AI risk

The recent AI boom — and the related rush to manufacture semiconductors and build data centres — has supported global growth even as geopolitical pressures, including the war in the Middle East, weigh on the economy. But the IMF warned the boom may be less solid than asset prices suggest.

The Fund pointed to growing evidence that AI capabilities may require less investment than expected, or that the economic gains might fall short of forecasts — meaning weaker AI investment and profitability could be the shock that triggers a market correction.

Leverage adds to the danger. Hyperscalers now account for 10 per cent of global investment-grade bond issuance, up from less than 1 per cent in 2024, a build-up that could amplify any shock through forced selling and higher volatility. The IMF said the consequences of such a correction would be felt globally, and called on policymakers to curb excessive leverage, including derivatives and margin loans.

Cyber and bond yields

Cyberattacks form the report’s second pillar of risk. The Fund warned that severe cyber incidents could undermine market confidence and disrupt the critical infrastructure markets run on. Athanasios Vamvakidis, deputy director of the IMF’s Monetary and Capital Markets Department, described the cyber threat to the financial system as both known and very much unknown.

Rising government bond yields round out the trio of threats. The Fund stressed that these risks do not automatically threaten financial stability on their own, but could turn systemic if they combine with underlying vulnerabilities in the system.

The report also examined tokenised markets, finding that tokenised real-world assets — excluding stablecoins — reached about $65 billion by July 2026, dominated by fixed-income products worth roughly $48 billion. Tokenised equities, by contrast, remain tiny: about $2.3 billion, or just 0.0029 per cent of the $151.9 trillion global listed equity market.

Why it matters

For emerging markets, the warning lands close to home. Pakistan is in the final phase of talks with the IMF over a $1.2 billion tranche — a sharp tightening of global financial conditions would mean costlier borrowing, pressure on capital flows and less room for error in countries already running on tight reserves. And as banking and payments digitise worldwide, the cyber warning is not abstract: a single severe incident can freeze market infrastructure that millions depend on every day.

What’s next

The Fund’s policy prescription is blunt. “The policy priority should be to strengthen resilience before new shocks hit the economy,” Vamvakidis told reporters at the Bangkok briefing. The annual meetings continue through the week, with the World Economic Outlook briefing, led by IMF Chief Economist Silvana Tenreyro, setting the tone for how governments respond.