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MAS Warns of Financial Stability Risks as Billions Pour Into AI

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MAS Warns of Financial Stability Risks as Billions Pour Into AI

Businesses are adopting AI rapidly, but the technology has yet to deliver widespread productivity gains, according to the Monetary Authority of Singapore (MAS).

Edward S. Robinson, MAS Deputy Managing Director (Economic Policy) and Chief Economist, highlighted this gap at the 2026 Beijing Financial Street Forum on 20 October.

AI-driven electronics account for more than 70 percent of Asia’s export growth this year.

Much of the growth in AI-producing industries reflects higher investment and equipment use rather than sustained productivity improvements.

Robinson noted that broader gains would require businesses to adapt their operations and invest in skills and infrastructure.

The Organisation for Economic Co-operation and Development (OECD) estimates that AI could boost annual productivity growth by up to 0.6 percentage points with widespread adoption and supporting investment.

Robinson cautioned that expectations of future AI gains could inflate asset prices and encourage excessive borrowing.

A reassessment of those expectations could trigger falling valuations and tighter credit conditions.

He stressed that central banks should base monetary policy decisions on actual economic conditions rather than anticipated productivity gains.

Monetary policy may need to remain restrictive while investment-driven demand dominates, with scope for easing once sustained productivity improvements emerge.

Robinson also called for safeguards against excessive borrowing and regulatory measures to support AI adoption.

Featured image: Edited by Fintech News Singapore, based on image by MAS



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