Rising risks from AI, bond yields and cyberattacks in global markets

Sovereign bond yields have risen amid inflation pressures, fiscal concerns and, in some cases, stronger-than-expected growth. A sharper rise could lower valuations of other assets and reduce the value of bonds used as collateral, the IMF authors warn.

A major cyberattack could disrupt payments, trading or access to deposits, particularly if it hits a major financial institution, payment system, cloud provider or software platform. The IMF blog says such an incident could spread through an interconnected financial system and weaken confidence.

Vulnerabilities beneath the surface

The IMF says existing weaknesses could magnify any of the three risks. In its adverse stress scenario, banks holding 22 percent of global banking assets would end up with capital ratios below regulatory limits, up from 18 percent a year earlier. That is a stress-test outcome, not a finding that those banks currently breach the limits.

To bolster resilience, the IMF recommends putting government debt on a sustainable path, limiting leverage and liquidity mismatches in AI and nonbank finance, and strengthening cyber defenses through measures such as incident reporting and resilience testing.