How the AI bubble could pop and take down the global economy, according to the BIS
AI and ML
Central bank for central banks sees shades of dotcom mania in hyperscaler capex binge
The central bank for central banks is concerned about the eye-watering sums being invested into AI, and it's raising the specter of a global recession should the bubble burst.
In its annual report for 2026, the Bank for International Settlements compared the current craze to historical events, including canal and British railway mania in the 1800s, electrification exuberance of the 1920s, and the dotcom boom of the 1990s.
The report states: “all shared one common trait: a genuine technological breakthrough that attracted capital in excess of what commercial returns could ultimately justify.
“These episodes ended with an eventual reversal in investment, inducing economy-wide recessions. The scale and pace of the current AI investment boom accompanied by expectations of large productivity payoffs bear resemblance to these precedents, highlighting potential downside risks in the...
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