Software may contain bugs for private credit – BIS paper
Bulletin says disruption from AI could cause outage for lenders heavily invested in sector
Exposure to the software sector could pose risks for private credit, given the potential disruption from artificial intelligence, economists at the Bank for International Settlements have warned.
In a bulletin published on July 14, Fernando Avalos, Giulio Cornelli and Egemen Eren say software has been attractive to direct lenders over the past decade because of its recurring revenues, high margins and low capital needs. However, this business model is now vulnerable to AI – which, in turn, raises
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