IMF/World Bank summit's focal topic: Global central banks discuss "What to do about a stock market crash?"

Amid widespread skepticism about the "AI bubble theory," next week, central bank governors and finance ministers from around the world will gather in Washington for the International Monetary Fund (IMF) and World Bank's autumn meetings.

As the AI boom drives global stock market valuations to historic highs, central bank governors are collectively facing a new concern: the danger of a market crash. Media analysis suggests they may focus on how to respond to a potential market crash and its impact on the global economy.

IMF President Kristalina Georgieva has already set the tone for discussions in the coming days during a recent speech. She candidly acknowledged the risks to financial stability and warned that:

Asset valuations are approaching levels we saw 25 years ago during the internet boom.

She stated that if the market experiences a sharp correction, a tightening financial environment could hinder global economic growth, expose vulnerabilities, and make the situation particularly difficult for developing countries.

This time, Georgieva's warning is more straightforward than the IMF's comments during the October 2000 meeting. At that time, the organization merely described equity valuations as "still very high" in its World Economic Outlook report and hinted that imbalances could "unravel in a disorderly manner."

Overheated Stock Market: A Shared Concern Among Global Central Banks

This concern is not an isolated case but a widespread consensus among major central banks globally.

Worries about an overheated market have been brewing for some time. Over a month ago, European Central Bank officials received warnings about "sudden and sharp price corrections" during a policy meeting.

The Bank of England recently warned of the risk of "sharp market corrections"; the Reserve Bank of Australia also pointed out market vulnerabilities this month. Even Federal Reserve Chairman Jerome Powell stated in September that market valuations are "very high."

Officials have noted unsettling similarities, and this transatlantic and transpacific consensus makes next week's discussions in Washington particularly critical.

A Series of Major Events Next Week

The 2025 IMF and World Bank autumn meetings will be held from October 13 to 18.

In addition to the annual meetings, investors will focus on a series of significant reports and official statements to be released this week.

The IMF's Global Financial Stability Report and the latest World Economic Outlook will be published next Tuesday. Statements from the Group of Seven (G7) or Group of Twenty (G20) ministers attending the meeting will also be closely watched.

Regarding official speeches, Federal Reserve Chairman Powell is scheduled to speak next Tuesday about the economic and monetary policy outlook. Additionally, Federal Reserve governors Waller, Michael Barr, Milan, and several regional Federal Reserve presidents will also speak. On Wednesday, the Federal Reserve will release the Beige Book, reflecting economic conditions across the United States.

Despite frequent official warnings, it remains uncertain whether the market will cool down as a result. Tom Orlik, Bloomberg Economics' global chief economist, noted, "AI may be a bubble, but it is also a tremendous force."

He believes that the IMF's warning about overvaluation is undoubtedly correct, but whether these warnings can be heeded by investors plagued by the "fear of missing out" remains questionable