AI crash threatens sovereign debt

The IMF warns that a correction in AI‑related asset prices — combined with high leverage, crowded private trades, liquidity mismatches, and cyber fragility — could trigger broader market tightening and push up sovereign bond yields, amplifying public and private debt stress. The report explicitly links concentrated AI exposures, private‑credit leverage, and tokenized markets to systemic spillovers that could force policy interventions. — This reframes AI risk from abstract existential debate to immediate macroeconomic and fiscal vulnerability, affecting central banks, treasuries, regulators, and taxpayers.