Central Bank Financial Stability Report Flags AI Leverage Among Five Major Risks

The central bank’s Financial Stability Report assesses the resilience of Taiwan’s financial system and potential shocks. The global economy is being shaped by geopolitical tensions, U.S. trade policy and the course of monetary policy, while AI investment is driving up valuations and financing demand. A market reversal could transmit leveraged losses to banks, stock and foreign exchange markets, and households’ debt-servicing capacity.

The central bank released the report’s 20th edition on May 29, 2026, covering developments from early 2025 through April 2026. It identified five major risks: the global outlook, conflict in the Middle East, AI valuations and circular transactions, nonbank financial institutions, and stablecoins. For the first time, the report focused on off-balance-sheet AI financing and multiple layers of leverage. Household borrowing stood at NT$25.29 trillion at the end of 2025, equivalent to 88.11% of GDP.