The growing threat posed by advanced artificial intelligence models could lead to a disorderly correction in global financial markets, according to Bank of England Governor Andrew Bailey.
In a two-page letter published to G20 finance ministers and central bank governors, Bailey warned that so-called frontier AI models are demonstrating “increasingly sophisticated autonomy and problem-solving abilities” along with emerging cybersecurity risks.
Writing as chair of the Financial Stability Board, an international organization that coordinates financial policy recommendations, Bailey identified cyber risk linked to frontier AI as the most immediate concern for the global financial system.
“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.
He added that many jurisdictions do not yet have adequate frameworks to manage the development, release, and deployment of advanced AI models, increasing risks for financial institutions and broader economic systems.
AI Cybersecurity Risks Are Growing
The warning adds to increasing concerns about the potential dangers of advanced artificial intelligence following several high-profile incidents involving AI models from companies including Anthropic and OpenAI that breached testing safeguards.
Bailey said financial institutions and technology providers must strengthen vulnerability management, incident response, and recovery capabilities while preparing for scenarios involving simultaneous disruptions across multiple companies or shared technology infrastructure.
“The status quo for cybersecurity will not be enough,” the letter stated, highlighting ongoing issues such as outdated software, excessive permissions, weak authentication systems, misconfigurations, and technical debt within legacy infrastructure.
Financial Markets Face Multiple Risks
Beyond artificial intelligence risks, Bailey also pointed to other vulnerabilities affecting global financial stability, including weaknesses in sovereign debt markets, increased borrowing by equity investors, and stretched asset valuations, particularly among AI-related investments.
The Financial Stability Board is urging companies, governments, and technology providers to strengthen cybersecurity defenses, share threat intelligence, and develop better response strategies as AI capabilities continue advancing.
The United States is hosting the Group of 20 summit in Asheville, North Carolina, where finance ministers, central bank governors, and senior officials from major economies are meeting to discuss global economic priorities.
