Disappointing AI returns could turn the current capital spending boom “into a bust,” BIS chief Pablo Hernández de Cos warned.
Speaking at the Global Fintech Fest 2026 in Mumbai, the General Manager of the Bank for International Settlements (BIS) highlighted rising debt and opaque financing arrangements as potential risks to financial stability.
The five largest technology companies are expected to spend more than US$1 trillion on AI across 2025 and 2026.
Industry participants expect global AI investment to rise from about US$500 billion today to between US$3 trillion and US$4 trillion by 2030.
More AI Spending Is Funded by Private Credit
Capital expenditure at the largest companies is beginning to exceed their cash flows, increasing the need for external financing.
Hernández de Cos also raised concerns about financial links between chipmakers, cloud providers and AI firms that can be difficult to track and value.
Under so-called circular financing, technology suppliers take stakes in AI companies that then commit to buying their chips and computing services.
Intense competition could also encourage companies to invest more than future returns can support.
A market correction could affect household spending because consumers now hold more wealth in equities.
The impact could spread internationally due to the large share of global equity markets represented by US stocks.
AI Adds New Risks for Financial Institutions
Financial institutions also face cybersecurity risks as AI strengthens both attackers and defenders.
Attackers need to find only one vulnerability while institutions must protect their entire systems.
The technology could also make financial conditions harder for central banks to assess by affecting economic activity, inflation and interest rates at the same time.
Hernández de Cos called for better measurement, flexible policymaking and greater international cooperation as authorities respond to these risks.
Featured image: Edited by Fintech News Singapore, based on image by peshkovagalina via Magnific
