The IMF highlighted three prominent risks in its latest report, which could be short-term catalysts for sharp financial tightening and market turbulence. One risk is AI. According to the report, although core companies in the AI ecosystem have been profitable so far, easing the pressure on AI-related stock valuations, weakening or less protracted AI investment and profitability may trigger adjustments in AI-related asset prices, and rising leverage ratios, risk concentration, and revolving financing arrangements have exacerbated this adjustment. Judicial decisions relating to the development of global AI may be more susceptible to negative effects on financial markets. Second, given the importance of sovereign bonds, a resurgence in inflation or fiscal concerns could trigger a sharp rise in sovereign bond yields and trigger wider market turmoil. Although liquidity in the bond market is stable and some leveraged transactions have recently been lifted, the current situation of rising public debt and rollover risks has not been resolved, increasing the possibility that yields will rise in a disorderly manner. Third, as financial services become more digital and connected, cyber threats pose a growing systemic risk. Frontier AI models are becoming a powerful enabler of cyber attacks and a key defense tool. According to the IMF, these risks themselves do not necessarily threaten financial stability, but if amplified by financial vulnerability, they may become a systemic risk, damage key financial intermediaries and credit provision, and have serious negative economic impacts.

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