Bank of England Sounds Alarm on Energy Price and AI-Related Debt Risks
The Bank of England has issued a warning about rising financial risks stemming from energy prices and artificial intelligence-related debt borrowing.
The central bank's Financial Policy Committee notes that interconnected vulnerabilities in the financial system could materialize due to renewed tensions in Iran, escalating oil and gas prices, and rapid growth in AI-related debt.
Bond yields have reached levels not seen since 2008 as energy prices surge. Despite this, the regulator believes a sharp correction in market valuations remains possible, albeit so far the financial system has shown resilience.
The Bank of England also highlighted the increasing dependence on AI technologies by capital markets. Morgan Stanley reports that global AI-related debt borrowing stands at around $450 billion, roughly double 2025 levels.