The Bank for International Settlements warns of high leverage risks in the AI sector, as Situational Awareness funds have been hit by liquidity crises

The Bank for International Settlements warns of the financial fragility brought by high leverage in the AI field, and Situational Awareness Fund has been forced to transfer its core holdings to Citadel to resolve the liquidity crisis due to a drop in valuation caused by heavy holdings in AI. Frank Smetz, Head of Economic Analysis and Statistics at the Bank for International Settlements, stated that cross market leverage can easily amplify market volatility into systemic oscillations.