The AI boom and debt wall—Global risks for Canada are hiding in plain sight
Warnings from the Bank of Canada, the Bank for International Settlements, and the OECD point to growing risks from debt-fueled artificial intelligence investment and rising government borrowing, with both trends increasing the potential for financial instability, writes Charles Lammam. He says the rapid expansion of AI spending, financed increasingly through debt and non-bank lenders, resembles past investment booms that ended in market corrections, while governments worldwide are issuing record amounts of debt that rely on more leveraged and less stable investors. Canada, despite its strong credit rating, remains vulnerable to these global pressures through higher borrowing costs, mortgage rates and reduced business investment, he writes, noting that policymakers and the public have paid too little attention to these mounting risks.
