Bank of England Governor Andrew Bailey has warned that increasingly powerful artificial intelligence models could pose new risks to the global financial system in particularly by increasing the speed and scale of cyber threats as The Guardian reported Monday.
Bailey, who chairs the Financial Stability Board (FSB) raised the concerns in a letter to G20 finance ministers and central bank governors ahead of their meeting in North Carolina, US.
He said "frontier" AI models the most advanced systems in development are showing increasingly sophisticated autonomy, problem-solving ability and threat capability. Because global financial markets are highly interconnected, Bailey warned that cyber disruptions involving such systems could have wide-reaching consequences. He noted that many countries still lack protocols for managing the development and deployment of advanced AI models.
"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" he said, calling for coordinated global steps to ensure safe AI deployment.
Bailey also flagged other financial vulnerabilities including rising leverage in bond and equity markets and high valuations in concentrated markets also partly fuelled by investor optimism over AI.
"I remain concerned therefore that a large shock or combination of shocks could concurrently trigger multiple vulnerabilities" he said.
Bailey has served as Bank of England governor since March 2020 and was appointed FSB chair last year. The FSB coordinates global policy efforts among national financial authorities to maintain financial stability worldwide.
