Bank of England Governor Warns of AI Risk to Financial Stability

Bank of England Governor Andrew Bailey has warned G20 finance ministers and central bank governors that frontier AI models could create new risks for global financial stability, particularly through cyberattacks.

In a letter to G20 officials, Bailey, who also chairs the Financial Stability Board (FSB), said advanced AI models are showing increasingly sophisticated autonomy, problem-solving capabilities and threat capabilities. He said their impact on cyber risk could change the speed, scale, and economics of attacks against the financial system.

As a Financial Stability Board chair, Bailey stated: 

Recent developments have also highlighted to me that many jurisdictions do not have the protocols in place to manage the development, release, and deployment of advanced frontier AI models, heightening risks for the financial sector and beyond.

Bailey also warned that differences in national rules and cybersecurity capabilities could create additional vulnerabilities as financial institutions operate across borders.

The financial system's reliance on common technology providers is another of their concerns. Andrew Bailey said that infrastructures need to prepare for cyberattacks that can affect a widely used provider or shared systems, as they could spread to multiple institutions and markets instead of remaining isolated to a single company.

Bailey called on financial institutions and technology providers to improve vulnerability management, and urged governments to support the safe and orderly deployment of frontier AI.