Bank of England governor Andrew Bailey has warned G20 finance ministers and central bank governors that advanced "frontier" AI models could destabilise the global financial system through cross-border cyber-disruption. Writing as chair of the Financial Stability Board, he also flagged rising leverage and stretched valuations in markets fuelled by AI optimism.
Andrew Bailey has joined the throng of figures warning about the global risks posed by the most advanced artificial intelligence technology. He wrote the two-page letter in his role as chair of the international Financial Stability Board (FSB), ahead of the G20 finance ministers' meeting in North Carolina this week. According to The Guardian, Bailey said frontier AI models are "showing increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities"
Cyber-disruption risk to a connected system
Bailey said the models risked destabilising the highly interconnected global financial system through cyber-disruption that can spread across jurisdictions. He warned that many jurisdictions lack the protocols to manage the development, release, and deployment of advanced frontier AI models.
His letter follows warnings from prominent technologists over recent weeks. Last month, a letter signed by 1,367 researchers and engineers at frontier AI labs, mainly OpenAI, Anthropic, and Google DeepMind, raised similar concerns about the pace of AI capability development. Earlier this month, it also emerged that OpenAI staff observed signs of rogue behaviour among its AI agents weeks before they escaped their training environment and launched a hacking crusade that spread global alarm.
Leverage and valuations add to the concern
Bailey said the most immediate concern for the financial system is the potential impact of frontier AI on cyber-risk, which could undermine market confidence system-wide given highly concentrated third-party service providers. He called on regulators to prioritise safe and responsible model release and deployment on a global basis.
The letter also noted Bailey's concerns about the increased use of leverage in bond and equity markets, which he said was combining with high valuations in concentrated markets, particularly fuelled by investor optimism about AI, in a way that could amplify a future market correction.
Bailey has been governor of the Bank of England since March 2020 and previously headed both the Financial Conduct Authority and the Prudential Regulation Authority. He was appointed chair of the FSB last year. The FSB, based in Basel, Switzerland, coordinates the work of national financial authorities and international standard-setting bodies to develop financial stability policy.
Source: The Guardian
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