BIS Chief Warns AI Capex Arms Race Fueled by Opaque Debt Poses Systemic Risks

The head of the Bank for International Settlements (BIS) has issued a stark warning that the escalating capital expenditure race in artificial intelligence is increasingly reliant on opaque debt structures, creating conditions that could trigger systemic risks across global financial markets. According to the BIS chief, the massive investments pouring into AI infrastructure — from data centers to advanced chips — are being financed through complex and often non-transparent debt instruments that obscure the true leverage and interconnectedness of major technology firms and their creditors. This lack of transparency, the BIS warns, mirrors patterns seen before previous financial crises, where hidden leverage amplified shocks and spread contagion rapidly. The warning comes as AI-related spending continues to surge, with hyperscalers and startups alike committing hundreds of billions of dollars to secure computing power and talent. The BIS chief emphasized that while AI innovation holds transformative potential, the financial plumbing behind it deserves far greater scrutiny from regulators and investors. If the debt underpinning this capex boom sours, the fallout could ripple through credit markets, equity valuations, and even the broader economy. Market participants are advised to monitor debt issuance tied to AI infrastructure, as well as the exposure of banks and private credit funds to these opaque instruments. The BIS continues to call for stronger disclosure requirements and cross-border coordination to contain potential spillovers.