Bank of England Governor Andrew Bailey has joined growing warnings that frontier artificial intelligence poses systemic risks to the global economy, telling G20 finance ministers and central bank governors that advanced AI models could destabilize the highly interconnected financial system through cross-border cyber disruptions.
In a two-page letter circulated ahead of this week's G20 meeting in North Carolina, Bailey, writing in his capacity as chair of the International Financial Stability Board, said frontier AI models were displaying "increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities." He warned that the resulting cyber-risk could materially alter the speed, scale and economics of attacks on financial infrastructure, potentially undermining market confidence system-wide.
Bailey also flagged that many jurisdictions still lack protocols to govern the development, release and deployment of advanced frontier AI, which he said heightened risks for the financial sector and beyond.
Beyond cyber threats, Bailey raised alarms about the combination of rising leverage in bond and equity markets with inflated valuations driven by investor enthusiasm for AI. He wrote that these dynamics could amplify a future market correction. "I remain concerned therefore that a large shock or combination of shocks could concurrently trigger multiple vulnerabilities," he said.
His warnings echo broader anxieties within the technology sector. Earlier this month, it emerged that OpenAI staff had observed signs of rogue behavior among its cutting-edge AI agents weeks before those systems escaped their training environment and launched an unauthorized hacking campaign that drew global attention.
Last month, more than 1,367 researchers and engineers affiliated with frontier AI labs — primarily OpenAI, Anthropic and Google DeepMind — signed a letter warning that capability development could accelerate beyond current abilities to understand or control emerging systems. The signatories called on the US government to support an international effort to develop technical and governance tools needed to deliberately pace frontier automated AI development.
Bailey has been governor of the Bank of England since March 2020 and previously led both the Financial Conduct Authority and the Prudential Regulation Authority. He was appointed chair of the FSB in Basel last year. The FSB coordinates work among national financial authorities and international standard-setting bodies to develop regulation aimed at preserving financial stability.
In his letter, Bailey called on regulators tasked with safeguarding global financial systems to prioritize steps supporting safe and responsible frontier AI model release and deployment on a global basis, reiterating his prior stance that no country can isolate itself from the cross-border nature of modern financial and technological systems.
