IMF Stress Test: AI Crash Combined with Bond Market Turmoil Pushes More Global Banks to the Brink

PANews, October 13 - The International Monetary Fund said that under a "doomsday scenario," more global banks would be pushed to the brink of danger compared to a year ago. The institution stated that even as bank profits surge, AI-related challenges could endanger banks. The IMF's latest stress test examined how banks would cope with an AI crash, a surge in government bond yields, and an economic slowdown. Under this scenario, 22% of global banking assets would be held by 110 "weak" banks, whose core capital adequacy ratios would fall below 7%, or below the higher thresholds applicable to the world's most complex banks. In last year's test, 18% of banking assets under the stress scenario were concentrated in 88 "weak" banks. IMF's Athanasios Vamvakidis said that each year's scenario reflects risks deemed relevant at the time and is based on the same methodology. This year, risks to the global economy have amplified amid energy supply disruptions, concerns over an AI bubble, and rising yields.