Hong Kong must brace for AI bubble risk and quantum computer threat: HKMA chief
Eddie Yue urges city’s banks to safeguard against stock market correction coinciding with geopolitical events triggering inflation anxieties
Hong Kong must brace for the emerging risks of an artificial intelligence (AI) bubble bursting and quantum computers capable of hacking encrypted financial systems, the head of the city’s de facto central bank has warned.
Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority (HKMA), also said on Sunday that the banking regulator would focus on expanding the internationalisation of the yuan in the next few years.
Yue cautioned that the current euphoria surrounding the AI sector could mask vulnerabilities, and warned about a “stacking of risks” should a stock market correction coincide with geopolitical events that triggered inflation anxieties, causing fear that interest rates would rise.
“Whether it is their capital expenditure or their financing, it has started to increase in the debt market, whether through private credit or issuing corporate bonds,” he told a radio show, adding that it was unknown if AI could be commercialised to provide a good return.
He said Hong Kong had to prepare for the possibility of an AI market downturn by ensuring local banks maintained strong capital buffers, rigorous risk management and a highly resilient financial “cushion” to absorb any sudden macroeconomic shocks.
In March, tech giant Google warned that quantum computers could potentially hack some encrypted systems by 2029, giving governments and companies less time to prepare contingencies to safeguard their data.