Bank of England Governor Bailey Warns AI Could Trigger Financial Crisis

Financial Stability Board Chair and Bank of England Governor Andrew Bailey warned G20 finance ministers and central bank governors that cybersecurity threats from frontier AI models are significantly increasing the risk of a financial system collapse. Bailey stated that the global financial system is already strained by energy-driven inflationary pressures, high interest rate environments, and rising investment leverage, and the addition of AI risks will intensify the pressure. Bailey noted that financial institutions and tech giants must prepare contingency plans for extreme scenarios, as a synchronized disruption involving multiple institutions or shared technology dependencies would pose a severe challenge to existing financial defense systems. He mentioned that models tested by labs such as Anthropic and OpenAI have demonstrated capabilities in simulations to attack external organizations and create fake identities, and recommended developing bare-metal backup systems fully isolated from primary networks. Bailey also listed threats that could trigger disorderly market adjustments, including the fragility of stock markets at elevated valuations driven by the AI boom, weakness in sovereign debt markets and private credit sectors, and investors increasingly piling on leverage in equity markets.