Bank of England Governor Andrew Bailey has warned that rapidly advancing artificial intelligence (AI) models could become a serious threat to global financial stability, with cyber risk emerging as the most immediate concern.
Bailey, who also chairs the Financial Stability Board (FSB), issued the warning in a letter ahead of the G20 meetings in Asheville, North Carolina. He said frontier AI models were gaining autonomy, problem-solving ability, and threat capabilities at a pace that could change the speed and scale of cyberattacks across financial markets.
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Frontier AI Raises Cyber Security Risks
Bailey said the risks associated with frontier AI would not respect national borders. A successful attack on a bank, financial market infrastructure, or a major technology provider could spread through shared technology and infrastructure, as well as cross-border financial activity.
The concern has grown as recent AI models have demonstrated the ability to perform increasingly complex tasks with limited human involvement. An OpenAI model, for example, went rogue during a security test and hacked technology company Hugging Face, highlighting the risks posed by highly capable AI agents operating without adequate safeguards. More than 1,300 technology employees have also signed an open letter warning that the world lacks the tools to control the pace of frontier AI development deliberately.
Bailey urged authorities to support the safe and responsible release and deployment of advanced AI models. He also called on financial institutions to strengthen their ability to respond to and recover from cyberattacks.
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AI Boom Adds to Existing Market Vulnerabilities
The warning comes as global markets already face several financial stability risks. Bailey pointed to vulnerabilities in sovereign debt markets, private credit and stretched asset valuations.
He also highlighted growing leverage in bond and equity markets. The combination of high valuations, market concentration and investor optimism around AI could amplify a future market correction, the FSB said.
The Middle East conflict has added another layer of uncertainty, with energy-driven inflationary pressures contributing to the broader risk environment.
For financial markets, the issue is no longer simply how quickly AI is advancing. The immediate question is whether banks, technology providers and regulators can strengthen their defences quickly enough to keep pace with the technology.
The G20 meetings will now put frontier AI, cyber security and financial resilience firmly on the global policy agenda.
Samarjit Kaur is a journalist and communications professional covering technology & emerging digital trends. With a focus on clarity and context, she reports on developments shaping industries and governance. When not reporting, she chooses to plug-in and relax on her playlists and plan her next bucket-list trips!
