Bank of England Warns of AI-Driven Market Risks

Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, expressed concerns about the adequacy of current regulations regarding artificial intelligence in finance. Speaking at the European Central Bank's annual forum in Sintra, Portugal, on June 30, she highlighted the risks associated with 'agentic AI,' a class of autonomous systems that make decisions and execute actions without human intervention.

Agentic AI is different from typical chatbots used by banks to answer customer queries. These systems autonomously execute trades, process payments, and make commercial decisions at speeds no human could match. Breeden warned that correlated AI agents, meaning multiple autonomous systems trained on similar data and pursuing similar strategies, could amplify market volatility during periods of stress.

A survey from the Cambridge Centre for Alternative Finance found that roughly 52% of financial firms were already deploying agentic AI as of mid-2026. This raises concerns about systemic cyber threats tied to advanced AI models and questions about consent and liability when an AI agent autonomously decides to execute a trade that goes sideways.

Breeden proposed market-wide circuit breakers, essentially emergency stop buttons that regulators could activate to freeze trading if an AI-driven cascade starts spiraling out of control. She also recommended enhanced recovery protocols that would allow one bank to assume another institution's essential functions during an AI-related crisis.