The Globe and Mail reports in its Friday edition that the Bank of Canada said in its annual Financial Stability Report that while Canada's financial system has remained resilient amid economic uncertainty, it could face challenges from geopolitical issues, changes in U.S. trade policy and the rise of artificial intelligence. The Globe's Mark Rendell writes that Canadian households have navigated expensive mortgage renewals without a significant increase in insolvencies, and the banks are well-capitalized to handle potential losses in a severe downturn. Some financial-sector vulnerabilities, however, are intensifying. Stock market valuations appear high, risking a bubble. Governments are issuing more debt, often bought by highly leveraged hedge funds. Additionally, AI tools are introducing new cybersecurity risks for the sector. "Individually, these vulnerabilities seem manageable, but the economic and geopolitical environment is now more volatile," said senior deputy governor Carolyn Rogers, citing the Middle East conflict and uncertainty around the North American trade pact review. "This has made it more likely that a new shock or a combination of shocks could cause several vulnerabilities to crystalize at once."