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

The International Monetary Fund (IMF) stated that compared to a year ago, more global banks would be pushed to the edge of danger under a "doomsday scenario." The organization noted that even with soaring bank profits, challenges related to AI could jeopardize banks. The IMF's latest stress test examined how banks would cope with an AI crash, surging 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 were concentrated in 88 "weak" banks under the stress scenario. IMF's Athanasios Vamvakidis stated that each year's scenario reflects risks deemed relevant at the time and is based on the same methodology.