# How the AI boom exposes investors to risk, while a downturn could see a sharp crash: BIS > Source: > Published: 2026-06-28 09:00:05+00:00 # How the AI boom exposes investors to risk, while a downturn could see a sharp crash: BIS Bank for International Settlements says AI funding is funnelled through loosely regulated private credit channels, raising stability fears [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 [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. [hedge funds](https://www.scmp.com/topics/hedge-funds?module=inline&pgtype=article), private credit vehicles and other non-bank intermediaries. These 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. BIS, 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. “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. [financial markets](https://www.scmp.com/business/markets?module=inline&pgtype=article)and raise broader stability concerns.