Bank of England Governor Andrew Bailey has warned that increasingly capable artificial intelligence (AI) models could pose new risks to the global financial system, particularly by increasing the scale and speed of cyber threats, The Guardian reported on Monday.
Bailey, who chairs the Financial Stability Board (FSB), raised the concerns in a letter to G20 finance ministers and central bank governors ahead of their meeting in North Carolina, US.
He said “frontier” AI models, the most advanced systems at the leading edge of AI development, were demonstrating increasingly sophisticated autonomy and 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,” Bailey said.
Bailey called for “appropriate steps to support safe and responsible model release and deployment on a global basis”.
Other financial vulnerabilities
The governor also highlighted other vulnerabilities in financial markets, including increased leverage in bond and equity markets and high valuations in concentrated markets.
He said some of those valuations 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.
