Bailey Warns AI Bubble Could Unleash Global Market Crash
Bank of England Governor Andrew Bailey has issued a warning about the potential for an AI bubble to trigger a global market crash. In a letter to G20 finance ministers and central bank governors, Bailey expressed concern that the soaring levels of debt used to fund AI investments could amplify a future market correction.
The governor noted that investors are borrowing large sums to invest in a small number of AI companies and data center providers, driving up valuations to unsustainable levels. He warned that if these valuations were to collapse, investors would face the prospect of losing trillions of dollars overnight, triggering a chain reaction in the market.
Bailey also highlighted the risks posed by frontier AI models, which are showing increasingly sophisticated autonomy and problem-solving abilities. He noted that these models could potentially alter the speed, scale, and economics of cyber risk, undermining market confidence system-wide.