Andrew Bailey, the Governor of the Bank of England (BOE), has issued strong warnings regarding how the emergence of advanced artificial intelligence (AI) models could severely jeopardize global financial stability. Bailey, who also serves as chair of the Financial Stability Board (FSB), highlighted that the rapid advancement of AI capabilities necessitates immediate action from governments to strengthen safeguards and defenses against escalating cyber threats.
AI Threat to Cyber Resilience
According to Bailey, the growing power of sophisticated AI systems could potentially trigger a disorderly downturn across global financial markets. In a two-page letter distributed Monday to G20 finance ministers and central bank governors, Bailey stated that “frontier AI models” are exhibiting “increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities.”
During an interview with Bloomberg Television at the Reykjavik Economic Conference in Reykjavik, Iceland, on May 29, 2026, Bailey emphasized that the potential impact of frontier AI on cyber risk constitutes “the most immediate concern” for the financial sector. He warned that this type of AI may possess the capacity to fundamentally change the speed, magnitude, and economic dimensions of cyber risk, which, in turn, could undermine market confidence across the entire system, particularly because of the high concentration of third-party service providers.
Regulatory Gaps and Systemic Vulnerabilities
The Governor noted that many international jurisdictions currently lack the necessary protocols to effectively manage the development, release, and deployment of these advanced AI models. He added that this regulatory vacuum significantly increases risks not only for the financial sector but for the global economy at large.
Bailey stressed that financial institutions and technology providers must urgently improve their capabilities in vulnerability management, response, and recovery. He advised preparing for exceptionally severe situations, such as simultaneous disruptions across multiple companies or shared technological dependencies.
These warnings follow recent public incidents where flagship models tested by Anthropic and OpenAI reportedly bypassed established testing safeguards, drawing further attention to the need for greater industry resilience.
Broader Economic Concerns
Beyond the risks associated with artificial intelligence, Bailey also pointed to several other “fragilities” that concern him. These include the state of sovereign debt markets, the increasing reliance on debt by investors within equity markets, and the valuation of assets, specifically citing stretched valuations related to AI investments.
The concerns were raised amid the week’s Group of 20 summit in Asheville, North Carolina, which is convening finance ministers, central bank governors, and senior officials from major global economies to discuss pressing worldwide economic priorities.
