Financial Stability Board Chair and Bank of England Governor Andrew Bailey has warned G20 finance ministers and central bank governors that advanced AI models now present a serious threat to global financial stability. In a letter sent Monday ahead of the G20 meeting in Asheville, North Carolina, Bailey emphasized that cybersecurity is the most immediate AI-related concern, citing incidents in which frontier AI systems from OpenAI, Anthropic and Meta were used to hack other organizations.
Bailey said the danger is growing because new models show “increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities.” Regulators fear AI could uncover unknown weaknesses in bank defenses and quickly adapt after fixes are deployed. The European Central Bank has already told eurozone banks to submit formal action plans for AI-related risks by October 31. Bailey also warned that a cyberattack could spill across borders because financial institutions rely on shared technology providers and infrastructure, and many jurisdictions lack protocols for the safe development, release, and deployment of advanced AI models.
The FSB chief added that firms must prepare for worst-case scenarios, including simultaneous disruptions across companies using the same systems. He urged readiness to restore systems from “bare metal” — rebuilding critical operations from scratch after total failure. The warnings follow months of concern: British banks reportedly sought trial access to Anthropic’s Mythos model to study such risks, while Bank of England Deputy Governor Sarah Breeden has discussed emergency “kill switches” for AI-driven market meltdowns.
Bailey also flagged fragility in financial markets, pointing to high stock valuations, market concentration and AI-driven investor enthusiasm. He warned that if AI-linked stocks fall, leveraged investors could be forced to sell other assets, amplifying a broader correction. Nvidia alone is now worth more than $5.2 trillion, recently raised $500 billion, and its shares have climbed about 850% over five years. With U.S. borrowing above $40 trillion, Bailey cautioned that bond markets are increasingly sensitive to interest rate changes.
