Bank of England governor warns G20 of AI financial risks

Bank of England Governor Andrew Bailey on Monday warned G20 finance ministers that frontier artificial intelligence models pose escalating risks to global financial stability, particularly by amplifying the scale and velocity of cyber threats across highly interconnected markets, according to The Guardian.

AI capabilities and cyber threats

Speaking ahead of the G20 meeting in North Carolina, Bailey — who chairs the Financial Stability Board — delivered the warning in a letter to central bank governors and finance ministers. He said frontier AI systems demonstrate "increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities," cautioning that many jurisdictions lack protocols to manage such technologies. "Frontier AI may have the ability materially to alter the speed, scale and economics of cyber-risk, which could undermine market confidence system-wide, especially due to highly concentrated third-party service providers," he said.

Systemic vulnerabilities

Bailey also identified fragilities in bond and equity markets, where increased leverage and elevated valuations — partly fueled by investor optimism regarding AI — leave the system exposed to sudden shocks. "I remain concerned therefore that a large shock or combination of shocks could concurrently trigger multiple vulnerabilities," he stated, urging "appropriate steps to support safe and responsible model release and deployment on a global basis."

Bailey has served as governor of the Bank of England since March 2020 and assumed the chairmanship of the FSB last year. The board coordinates policy among national financial authorities and international standard-setting bodies to maintain global financial stability.