Bailey Warns G20 of AI Threat to Global Financial Stability
Bank of England Governor Andrew Bailey has sounded the alarm on the potential threat to global financial stability posed by advanced artificial intelligence, particularly in the realm of cyber-attacks. In a warning addressed to G20 finance ministers and central bank governors, Bailey highlighted the 'frontier impact' of AI on cyber risk, which he believes poses an immediate concern for the financial system.
Bailey emphasized that the increased pace and magnitude of impact from cyber-attacks could lead to a loss of market confidence. He urged regulators to ensure a safe and orderly roll-out and use of frontier AI, while also calling on the finance sector to upgrade its capacity for major cyber-related shock response and recovery.
The Bank of England governor also noted that financial markets are already dealing with overvalued assets, high levels of leverage, and risks in sovereigns and private credit markets. He cautioned that the effect of both AI-related optimism and market concentration risk a future correction to fall further than could otherwise be expected.