Bank of England Governor Andrew Bailey warned in a letter to G20 finance ministers and central bank governors that frontier artificial intelligence models could precipitate disorderly corrections in global financial markets.
The two-page missive, delivered ahead of the U.S.-hosted G20 summit in North Carolina, highlights cyber risk as the most immediate threat to financial stability. Bailey noted that advanced AI systems may fundamentally alter the speed, scale, and economics of cyber threats, particularly where third-party service providers are highly concentrated. "Frontier AI may have the ability materially to alter the speed, scale and economics of cyber risk, which could undermine market confidence system-wide," he stated.
The warning underscores broader systemic vulnerabilities, including fragilities in sovereign debt markets, elevated investor leverage in equity markets, and stretched valuations tied to AI-related assets. Bailey also flagged regulatory gaps in many jurisdictions, which currently lack protocols to manage the development, release, and deployment of advanced AI models.
The letter calls for enhanced vulnerability management and response capabilities among financial institutions and technology providers. It emphasizes the need to prepare for severe scenarios involving simultaneous disruptions across multiple firms or shared technological dependencies, which could propagate shocks through interconnected financial networks.
Bailey’s remarks were delivered in his capacity as chair of the Financial Stability Board, an international body tasked with coordinating policy recommendations to national authorities. The document was published on August 31, 2026, and follows recent testing incidents involving flagship AI models from Anthropic and OpenAI, which breached established safeguards during evaluation.
