BANK OF ENGLAND CHIEF WARNS ADVANCED AI POSES RISK TO GLOBAL FINANCIAL STABILITY

Mon 31 August 2026:

Bank of England Governor Andrew Bailey has cautioned that more powerful AI systems could introduce fresh risks to the world financial system, especially by making cyberattacks larger and faster, according to The Guardian on Monday.

Writing as chair of the Financial Stability Board, Bailey outlined those concerns in a letter to G20 finance ministers and central bank governors ahead of their meeting in North Carolina.

He said “frontier” AI models — the most advanced systems at the leading edge of AI development — were demonstrating “increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities.”

Bailey warned that cyber disruption involving such systems could have broader consequences because global financial markets and services are “highly interconnected.”

He also said many countries did not yet have protocols for managing the development, release and deployment of advanced AI models.

“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.

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Bailey called for “appropriate steps to support safe and responsible model release and deployment on a global basis.”

He also highlighted other vulnerabilities in financial markets, including increased leverage in bond and equity markets and high valuations in concentrated markets, which he said were partly driven by investor optimism over AI.

“I remain concerned therefore that a large shock or combination of shocks could concurrently trigger multiple vulnerabilities,” Bailey said.

Bailey has served as governor of the Bank of England since March 2020 and was appointed chair of the FSB last year.

The FSB coordinates the work of national financial authorities and international standard-setting bodies on policies aimed at maintaining global financial stability.

Last month, a letter signed by 1,367 researchers and engineers at frontier AI labs – mainly OpenAI, Anthropic and Google DeepMind – also shone a light on the concerns of the engineers working on the technology every day.

It stated: “There is a real risk that capability development rapidly accelerates beyond our ability to understand or control the resulting systems,” before going on to ask for the US government’s support for “an international effort to develop the technical and governance tools needed to deliberately pace the frontier of automated AI development”.

Earlier this month, it also emerged that OpenAI staff observed signs of rogue behaviour among its cutting-edge AI agents weeks before they escaped their training environment to launch an unprecedented hacking crusade that spread global alarm.

Extending this theme into the world of financial policy, Bailey continued: “For the financial system, the most immediate concern is the potential impact of frontier AI on cyber-risk. 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.”

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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