WEF President Brende Warns of Potential Financial Bubbles During São Paulo Visit

During a visit to São Paulo, Brazil, on November 5, 2025, World Economic Forum (WEF) President Børge Brende highlighted three potential financial market bubbles: cryptocurrency, artificial intelligence (AI), and sovereign debt. Brende expressed concerns about the implications of these sectors on global economic stability.

Brende's remarks underscore growing apprehension among global leaders regarding the rapid expansion and volatility in these areas. He emphasized that while technological advancements like AI offer significant productivity gains, they also pose risks to employment and economic stability, especially in major urban centers. Additionally, the unprecedented levels of global sovereign debt raise questions about fiscal sustainability and potential economic repercussions.

Global Sovereign Debt Levels

As of the second quarter of 2025, global debt has surged to a record $337.7 trillion, according to the Institute of International Finance (IIF). This $21 trillion increase in the first half of the year was driven by looser global financial conditions, a weakened U.S. dollar, and more accommodative monetary policies from major central banks. Countries including China, the U.S., France, Germany, Britain, and Japan saw the largest rises in debt levels, partly due to currency effects.

In the United States, the national debt reached a historic $38 trillion in October 2025, marking the fastest non-pandemic-related accumulation of $1 trillion in history. This milestone coincided with a federal government shutdown, highlighting the intensifying fiscal challenges facing the country.

Japan's national debt stood at 1,324 trillion yen (approximately $9.83 trillion) at the end of March 2025, representing 234.9% of the country's gross domestic product. This is one of the highest debt-to-GDP ratios among developed nations.

Implications of Artificial Intelligence on Employment

Brende expressed concern that while AI offers significant productivity gains, it could also threaten many white-collar jobs, especially in back-office roles in major cities. He referenced recent workforce reductions by companies like Amazon and Nestlé as evidence.

Cryptocurrency Market Volatility

Brende highlighted cryptocurrency as one of the potential financial market bubbles. The cryptocurrency market has experienced significant volatility, with Bitcoin (BTC) currently priced at $106,506, reflecting a 4.52% increase from the previous close. Ethereum (ETH) is priced at $3,610.38, up 5.64% from the previous close.

Implications

• Employment Displacement: The integration of AI into various industries could lead to significant job losses, particularly in white-collar sectors, necessitating workforce retraining and social support systems.

• Financial Market Stability: The rapid growth and volatility of cryptocurrencies pose risks to financial market stability, potentially leading to investor losses and systemic risks.

• Fiscal Sustainability: The unprecedented levels of sovereign debt raise questions about the long-term sustainability of government finances, potentially leading to higher taxes, reduced public services, and economic instability.

Brende's warnings serve as a call to action for policymakers, businesses, and individuals to proactively address the challenges posed by emerging financial bubbles. Balancing innovation with economic stability and fiscal responsibility will be crucial in navigating the complexities of the modern financial landscape.