IMF Warns of Risks from AI Stock Decline and Leverage Expansion in RWA Market

IMF Warns of Leverage Expansion Due to AI Stock Decline and RWA Market Growth

The latest "Global Financial Stability Report" released by the IMF (International Monetary Fund) provides a detailed analysis of both the risks in traditional financial markets and the rapidly expanding new trend risks in the realms of cryptocurrencies and DeFi (Decentralized Finance).

In particular, the rapid price adjustments of AI (Artificial Intelligence) related stocks, which have been driving the global stock market, and the leverage risks associated with RWA (Tokenized Real World Assets) that are quickly expanding in market size, are being strongly cautioned as potential threats to the stability of the financial system, as they mutually influence each other.

Market Adjustments and Concentration Risks Arising from Disappointing AI Boom

The massive investments and high growth expectations in the AI (Artificial Intelligence) sector have propelled the rise of the global stock market. However, the IMF emphasizes that if AI companies fail to deliver the expected returns to investors, rapid valuation corrections (stock price adjustments) could ripple through and deliver severe shocks to the entire financial system.

Particularly concerning is the high concentration of certain mega-tech companies within major U.S. stock indices. There exists a structure where a sharp decline in the stock prices of specific companies could shake the entire investment portfolio, and the cyclical funding structure among AI developers, infrastructure companies, and investors raises concerns that losses during shocks could be excessively amplified.

Rising Government Bond Yields and Shock Amplification by Non-Bank Financial Institutions

The rising global government bond yields further exacerbate the risks of AI stock adjustments.

The increase in borrowing costs lowers the present value of technology companies that require substantial funds for large infrastructure investments such as data centers and energy supply networks, leading to a deterioration in the funding environment. Additionally, attention must be paid to the vulnerabilities of non-bank financial institutions (NBFIs) such as hedge funds and private credit providers. The combination of excessive leverage—over-indebtedness and liquidity shortages—could lead to forced asset sales, evolving into a severe financial tightening shock that goes beyond mere stock price adjustments.

The Rapid Growth of the Tokenized RWA Market Reaching $65 Billion

On the other hand, the RWA (Tokenization of Real World Assets) market utilizing blockchain technology has emerged as a new risk factor. According to IMF estimates, the market size of tokenized RWA on public blockchains, excluding repo transactions, has reached approximately $65 billion (around 10 trillion yen).

The breakdown shows that tokenized credit (such as bonds) accounts for $30.4 billion (approximately 4.8 trillion yen), followed by MMFs (Money Market Funds) at about $17.5 billion (approximately 2.77 trillion yen), and equities at $2.3 billion (approximately 363.95 billion yen).

Particularly in tokenized equities, Ondo Finance and Backed Finance together account for over 70% of the total, indicating an extremely high concentration. Furthermore, many transactions occur in units of less than one share outside of general market hours, characterized by a trading style centered on individual investors and high volatility (price fluctuation differences).

Leverage and Regulatory Challenges as New Transmission Channels

The expansion of the tokenized market raises concerns that traditional risks could spread through new channels, such as fire sales and liquidity runs leading to credit instability. The composability across multiple platforms and the use of collateral have created unprecedented interconnectivity and leverage correlations.

Considering the current market size, the immediate potential for systemic risk is seen as limited. However, the IMF strongly encourages the standardization of international regulations across jurisdictions, ensuring legal clarity, and enhancing interoperability in preparation for future rapid expansions.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.