Zhang warns AI can accelerate inflation and amplify financial risks
Tao Zhang of the Bank for International Settlements (BIS) warned that AI can accelerate price transmission, reinforce herding and expand cyber risks. His remarks were prepared for Beijing's Financial Street Forum on October 20, 2026.
Faster prices, more correlated risks
AI-enabled pricing can transmit aggregate shocks to consumer prices faster, Zhang said.
Shared models, data and decision rules can synchronize trading and lending, amplifying price moves when leverage and illiquid assets compound adjustments.
BIS analysis identifies growing debt financing, including private credit, and circular financing within the AI ecosystem.
AI also strengthens cyber defenses while accelerating attacks; shared service providers can spread disruption across institutions.
The BIS's 2026 Annual Economic Report calls for better supervisory visibility into AI use and correlated exposures.
Zhang advocated examining common dependencies and stress scenarios, not a uniform macroprudential measure.
Shared experiments across borders
Zhang called for international cooperation on governance, human oversight and capacity-building, citing unequal access to data, technology and expertise.
BIS forums, networks and Innovation Hub Centres support exchanges among authorities.
Project Spectrum, with the Deutsche Bundesbank and the European Central Bank, explored turning daily product-price data into structured information for inflation analysis.
The Financial Stability Institute's work points to strengthening existing cyber resilience frameworks as AI changes threats.
Human judgment remains essential
Zhang stressed that better information does not determine its meaning for inflation or the appropriate policy response.
AI outputs can be wrong, difficult to explain or constrained by their data.
His prescription combines human scrutiny and accountability with operational resilience and cross-border learning.