In its semi-annual Financial Stability Review, the central bank said advances in frontier AI capabilities, combined with wider technological progress, are lowering the cost and level of technical expertise needed to carry out sophisticated cyberattacks against financial institutions and financial market infrastructure, Xinhua reported.
The RBA said that while AI could eventually boost productivity and improve operational resilience, the speed of its development could initially make the cyber threat environment more challenging and raise the risk of existing operational weaknesses being exposed.
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The bank also warned that the scale and pace of AI-related investment and financing could generate financial stability vulnerabilities if they continue expanding over the coming years.
According to the RBA, companies involved in AI are increasingly relying on debt to finance large-scale projects, raising the exposure of investors in both private and public markets to the sector.
“With the industry rapidly issuing large volumes of debt, its importance in public and private credit markets is expected to grow, mirroring the trend observed in equity markets and expanding the range of investors exposed to the AI investment boom,” the central bank said.
The RBA also pointed to the growing use of off-balance-sheet financing through special purpose vehicles to fund major AI infrastructure projects, warning that this could result in hidden exposures and less transparent links between financial entities.
The central bank said substantial external financing for AI investment would increase credit exposure among banks, bond markets, private credit providers and other institutional investors if capital spending expands in line with current market expectations.
At the same time, the RBA cautioned that long-term earnings forecasts are based on widespread adoption of AI technologies and strong revenue growth, while the timing, scale and distribution of those gains remain uncertain.
“If returns fall short of expectations, several features of the AI investment boom could potentially lead to losses among lenders and investors,” the RBA said.
