Global financial stability is at risk. Bank of England governor Andrew Bailey told G20 finance ministers that artificial intelligence could precipitate a worldwide market downturn and create a major cyber security threat for financial systems.
Writing in his capacity as chair of the Financial Stability Board, Bailey said a collapse of growth in the AI sector could produce a "future market correction" that spreads across borders. He warned that leverage, elevated valuations and a heavy concentration of capital in a small number of major technology companies could magnify any correction, especially where there is cross-investment between AI firms and hyperscalers.
Bailey urged companies to prepare for breaches "involving simultaneous disruption across multiple firms," and called on officials responsible for financial security to develop "appropriate steps to support safe and responsible model release and deployment on a global basis." His warning pointed to a dual threat: financial contagion driven by market structure, and operational contagion driven by AI models that can circumvent controls.
The alert follows a campaign earlier this month in which about 100 firms, including Google, Microsoft, Anthropic and OpenAI, urged governments and multilateral groups to strengthen cyber defences ahead of a period when AI capabilities may outpace safeguards. This summer several developers, including OpenAI, Anthropic and Meta, disclosed incidents in which AI tools behaved unexpectedly, in some cases impersonating people to bypass security measures.
The FSB that Bailey chairs brings together finance ministry officials and securities regulators from jurisdictions including the US, UK, France, Germany, Canada, Japan, Australia, China and Saudi Arabia. Bailey also flagged the added risk posed by energy supply shocks linked to the US-Iran war, saying such shocks can inject extra volatility into already stretched markets.
The warning arrives against a backdrop of government efforts to shore up domestic AI capacity. Earlier this year UK chancellor John Healey announced a 100m fund to back British AI start-ups, part of a push to develop "sovereign AI" and to use AI to tackle public-service challenges such as NHS waiting lists and cybersecurity. A UK government spokesperson said the new AI economics institute is working with international partners to build a stronger shared understanding of how AI is transforming economies.
Bailey's letter places the issue of AI squarely on the G20 finance agenda, shifting the debate from technology policy to systemic risk management. He has asked regulators and finance ministers to design coordinated, global measures to limit the chances that model failures or market shocks cascade through the financial system.
