Julius Baer CEO Stefan Bollinger said an artificial intelligence bubble is the biggest market threat, citing AI financing beyond company balance sheets as a greater concern than banks, The Economic Times reported.
In the interview published Nov. 2, Bollinger rated the chance of a new crisis originating in banks as “incredibly low.” He focused instead on financing obligations around AI projects that do not sit directly with the firms using the capacity. “Banks are very safe,” he said.
Authors of a Bank for International Settlements (BIS) bulletin described a funding shift in AI infrastructure: more projects use extended-term borrowing and separate financing vehicles. These structures can let hyperscalers secure computing capacity while another entity carries related debt. If projects underperform, insurers and funds holding the obligations, and banks that lend to the vehicles or funds, could face losses.
Spending by the five largest U.S. hyperscalers is expected to exceed $800 billion by the end of 2026, about 2.5% of U.S. gross domestic product. Their gross bond issuance reached $222 billion through September, the bulletin’s authors reported.
The authors’ event study found that AI-financing news days in 2026 coincided with a small increase in the 10-year Treasury term premium that reversed within two trading days. Investment-grade corporate spreads showed no significant shift. They cautioned that the event-day estimates show an association and do not establish that the news caused the market moves.
The International Monetary Fund (IMF) said in its October report that leverage and concentrated positions could magnify a correction in AI-related assets. It judged banks worldwide to be generally resilient, while noting weaker institutions in some areas and vulnerabilities in nonbank finance. The BIS bulletin’s authors also compared the pace of AI-credit growth with earlier credit booms, whose eventual strength can be difficult to assess while they are still developing. EconoTimes previously covered concerns about debt-funded AI expansion.
The Federal Open Market Committee (FOMC) kept its benchmark range at 3.75% to 4% on Oct. 28 in a 10-2 vote. Federal Reserve Governor Lisa D. Cook and Federal Reserve Bank of Cleveland President Beth M. Hammack favored a 0.25-percentage-point increase. The Bureau of Labor Statistics (BLS) said consumer prices rose 3.7% from a year earlier through September before seasonal adjustment and 0.6% from August to September after seasonal adjustment. The October consumer price report is scheduled for Nov. 10 at 8:30 a.m. ET, ahead of the FOMC’s next meeting on Dec. 8-9.
