AI-Powered Cyber Threats Could Disrupt Global Financial Markets

Andrew Bailey, Governor of the Bank of England and chair of the Financial Stability Board (FSB), has issued a warning about the rapidly improving artificial intelligence (AI) models that could sharply increase cyber threats to the global financial system. In a letter to G20 finance ministers and central bank governors ahead of their meetings on August 31 and September 1, Bailey described the effect of frontier AI on cyber risk as the financial system's most immediate AI-related concern.

The advanced AI models are displaying greater autonomy and problem-solving capabilities, potentially changing the speed, scale, and economics of cyberattacks. Bailey noted that a heavy reliance on a relatively small number of technology providers could make the financial sector particularly vulnerable if several firms depending on the same supplier were disrupted simultaneously.

In its July Financial Stability Report, the Bank of England raised similar concerns, saying recent frontier models can conduct multi-stage attacks against vulnerable systems with little human input. In one test conducted by Britain's AI Security Institute, a frontier model completed an advanced reverse-engineering task in 10 minutes and 22 seconds, whereas a human expert required about 12 hours.

The central bank warned that faster vulnerability discovery could leave companies with less time to identify, test, and deploy security fixes before attackers act. In a severe scenario, similar weaknesses could be exploited simultaneously across financial firms or third-party suppliers, disrupting services including payments, trading, clearing, and settlement.

British regulators have already told companies to adjust their defenses. The Bank of England, Financial Conduct Authority, and UK Treasury said in May that the cyber capabilities of current frontier models were exceeding those of skilled practitioners in some areas while operating faster, at greater scale, and at lower cost. Firms were urged to strengthen detection, containment, response, and recovery systems.

Bailey has also called for international coordination on testing advanced models before they are widely deployed. He said governments could not isolate themselves from cyber threats that cross national borders and argued that frontier models should undergo coordinated testing against critical infrastructure.