{"slug": "how-the-ai-boom-exposes-investors-to-risk-while-a-downturn-could-see-a-sharp-bis", "title": "How the AI boom exposes investors to risk, while a downturn could see a sharp crash: BIS", "summary": "The Bank for International Settlements warned that the artificial intelligence investment boom is funneling capital through loosely regulated non-bank channels, exposing the financial system to risks that could lead to a sharper crash than traditional banking crises during a downturn. BIS chief representative Zhang Tao highlighted the potential for rapid unwinding due to interconnectedness and regulatory blind spots.", "body_md": "# How the AI boom exposes investors to risk, while a downturn could see a sharp crash: BIS\n\nBank for International Settlements says AI funding is funnelled through loosely regulated private credit channels, raising stability fears\n\n[artificial intelligence investment boom](https://www.scmp.com/business/article/3354407/ai-boom-fuels-us116b-data-centre-investment-asia-pacific-hong-kong-eyes-niche-role?module=inline&pgtype=article)and capital flows surge through loosely regulated, non-bank channels, a key international organisation has warned that an\n\n[AI downturn](https://www.scmp.com/business/china-business/article/3356289/hong-kong-stocks-slumped-ai-rallies-asia-unwind-us-rate-increase-anxiety?module=inline&pgtype=article)could develop into a sharper, faster crash than a traditional banking crisis.\n\n[hedge funds](https://www.scmp.com/topics/hedge-funds?module=inline&pgtype=article), private credit vehicles and other non-bank intermediaries.\n\nThese firms commonly operated with less oversight than conventional lenders, which could create blind spots, according to Zhang Tao, BIS chief representative for Asia and Pacific regions.\n\nBIS, a Switzerland-based institution that is often dubbed the “bank of central banks”, said in its report that the system could unwind far more rapidly in a downturn.\n\n“If the market has any sort of correction, the interconnectedness of the financial system and interplay of vulnerabilities could mean the speed of a correction could be much faster than previous banking crisis episodes,” Zhang said in an interview with the South China Morning Post in Hong Kong.\n\n[financial markets](https://www.scmp.com/business/markets?module=inline&pgtype=article)and raise broader stability concerns.", "url": "https://wpnews.pro/news/how-the-ai-boom-exposes-investors-to-risk-while-a-downturn-could-see-a-sharp-bis", "canonical_source": "https://www.scmp.com/business/banking-finance/article/3357993/how-ai-boom-exposes-investors-risk-while-downturn-could-see-sharp-crash-bis?utm_source=rss_feed", "published_at": "2026-06-28 09:00:05+00:00", "updated_at": "2026-06-28 09:13:52.765526+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-safety", "ai-policy"], "entities": ["Bank for International Settlements", "BIS", "Zhang Tao", "South China Morning Post"], "alternates": {"html": "https://wpnews.pro/news/how-the-ai-boom-exposes-investors-to-risk-while-a-downturn-could-see-a-sharp-bis", "markdown": "https://wpnews.pro/news/how-the-ai-boom-exposes-investors-to-risk-while-a-downturn-could-see-a-sharp-bis.md", "text": "https://wpnews.pro/news/how-the-ai-boom-exposes-investors-to-risk-while-a-downturn-could-see-a-sharp-bis.txt", "jsonld": "https://wpnews.pro/news/how-the-ai-boom-exposes-investors-to-risk-while-a-downturn-could-see-a-sharp-bis.jsonld"}}