Bank of England governor Andrew Bailey has added his voice to the growing number of figures warning about the global risks posed by the most advanced artificial intelligence technology.
In a two-page letter sent to international finance ministers and central bank governors, written in his capacity as chair of the international Financial Stability Board (FSB), Bailey said “frontier” AI models were “showing increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities”.
He said the models risked destabilising the “highly interconnected” global financial system through cyber-disruption that “can spread across jurisdictions”.
Writing to G20 finance ministers and central bank governors before their meeting in North Carolina, US, this week, Bailey said: “Recent developments have also highlighted to me that many jurisdictions do not have the protocols in place to manage the development, release, and deployment of advanced frontier AI models, heightening risks for the financial sector and beyond”.
His letter adds to the alarm bells about AI sounded by prominent technologists over the past few weeks. It also mirrors his earlier calls for international cooperation to tackle growing AI threats, when he told City bosses: “No country can seal itself off from the cross-border nature of systems that are prevalent today.”
Last month, a letter signed by 1,367 researchers and engineers at frontier AI labs, mainly OpenAI, Anthropic and Google DeepMind, also highlighted the concerns of the engineers working on the technology every day.
The letter stated: “There is a real risk that capability development rapidly accelerates beyond our ability to understand or control the resulting systems,” and asked for the US government’s support for “an international effort to develop the technical and governance tools needed to deliberately pace the frontier of automated AI development”.
Earlier this month, it emerged that OpenAI staff observed signs of rogue behaviour among its cutting-edge AI agents weeks before the agents escaped their training environment to launch an unprecedented hacking crusade that spread global alarm.
Extending this theme into financial policy, Bailey continued: “For the financial system, the most immediate concern is the potential impact of frontier AI on cyber-risk. Frontier AI may have the ability materially to alter the speed, scale and economics of cyber-risk, which could undermine market confidence system-wide, especially due to highly concentrated third-party service providers.”
Bailey called on those responsible for safeguarding the world’s financial systems to prioritise “appropriate steps to support safe and responsible model release and deployment on a global basis”.
The letter also noted Bailey’s concerns about increased leverage in bond and equity markets. He said this was combining with high valuations in concentrated financial markets, particularly fuelled by investor optimism about AI’s prospects, in a way that could amplify a future market correction.
“I remain concerned therefore that a large shock or combination of shocks could concurrently trigger multiple vulnerabilities,” Bailey wrote.
Bailey has been governor of the Bank of England since March 2020. He previously headed both the Financial Conduct Authority and the Prudential Regulation Authority, the UK’s two main financial regulators. He was appointed chair of the FSB last year.
The FSB, based in Basel, Switzerland, coordinates the international work of national financial authorities and standard-setting bodies to develop effective regulation and policies for financial stability.
