Bailey Sounds Alarm on Advanced AI Threats to Global Financial Stability

Andrew Bailey, Governor of the Bank of England and chair of the Financial Stability Board (FSB), has sounded the alarm on advanced artificial intelligence (AI) posing major risks to global financial stability. In a letter sent ahead of a G20 meeting in North Carolina, US, Bailey warned that AI models with increasingly sophisticated autonomy, problem-solving skills, and threat capabilities could trigger a severe international financial downturn.

Bailey highlighted that many jurisdictions lack the necessary regulatory protocols to manage the development, release, and deployment of these systems, leaving interconnected financial networks exposed. He noted that cyber-threats are the most immediate concern for the financial sector, as advanced AI could alter the speed, scale, and economics of cyber-attacks.

The Governor also warned of rising financial fragilities linked to the technology sector, including stretched valuations in AI investments, high leverage in bond and equity markets, and weaknesses in sovereign debt. Bailey expressed concern that a single major shock or combination of shocks could trigger multiple vulnerabilities at once.