Bailey Sounds Alarm on AI-Driven Cyber Threats to Global Financial Stability

Bank of England Governor Andrew Bailey has sounded the alarm on the potential risks posed by increasingly advanced artificial intelligence (AI) models to global financial stability. In a letter to G20 finance ministers and central bank governors, Bailey warned that 'frontier' AI systems, which are at the leading edge of AI development, are demonstrating sophisticated autonomy and threat capabilities.

These AI models could significantly increase the speed and scale of cyber threats, compromising market confidence system-wide. Bailey emphasized that global financial markets and services are highly interconnected, making them vulnerable to widespread disruption.

He also highlighted other vulnerabilities in financial markets, including increased leverage in bond and equity markets and high valuations in concentrated markets. Some of these valuations are partly driven by investor optimism over AI.

Bailey called for 'appropriate steps' to support safe and responsible model release and deployment on a global basis, citing the need for protocols to manage the development, release, and deployment of advanced AI models.