The Bank for International Settlements warned in its annual report that rising public debt, renewed inflation pressure, fragile bond markets and uncertainty over the durability of the artificial intelligence investment boom are increasing risks to the global economy. It said AI is one of the main pressure points for the world economy, with heavy spending, elevated expectations and financing concentrated in hedge funds, private credit vehicles and other non-bank financial intermediaries that face lighter oversight than banks. The BIS said that if AI returns disappoint or risk is repriced, losses could be amplified through these channels, potentially turning the current capital-expenditure boom into a broader period of underinvestment and triggering a faster market correction than in past banking crises. The report also said households now have greater exposure to equity markets, which could deepen the macroeconomic impact of a sharp fall in technology valuations, and urged policymakers to reinforce price stability, fiscal sustainability, oversight beyond banks and structural reforms.