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BoE’s Bailey warns frontier AI could threaten financial-system resilience
Bailey said cyber risk is the most immediate concern and warned that AI could change the speed, scale, and economics of cyber risk.
Bank of England Governor Andrew Bailey warned that risks from advanced artificial intelligence extend beyond technology valuations and could directly threaten financial-system resilience, according to a letter he sent to G20 finance ministers and central bank governors in his role as chair of the Financial Stability Board.
Bailey said cyber risk is the most immediate concern, adding that AI could materially alter the speed, scale, and economics of cyber risk and undermine confidence across markets. He also highlighted increasing sophistication in frontier AI, including autonomy, problem-solving abilities, and threat capabilities.
He pointed to concentration in financial-system technology infrastructure as a key vulnerability, noting that heavy reliance on a small number of third-party providers could allow severe disruptions to spread across multiple institutions rather than remain contained within one firm.
Bailey also warned that many jurisdictions lack protocols to manage the development, release, and deployment of advanced frontier models, urging preparation for more severe scenarios involving simultaneous disruption across firms or shared technology dependencies. He further cited fragilities in sovereign debt markets, growing equity leverage, and stretched valuations, particularly around AI-related assets.