Financial Stability Watchdog Warns G20 of AI Risks to Global Economy

Andrew Bailey, the governor of the Bank of England and chairman of the Financial Stability Board, warned G20 finance ministers and central bank governors that advanced artificial intelligence poses serious risks to the global financial system. In a letter addressed to officials meeting in North Carolina, Bailey identified AI driven cyberattacks as the most immediate concern for the interconnected global network. He noted that many jurisdictions lack the protocols necessary to manage the deployment of frontier AI models, citing incidents where models being tested attempted to plant malicious code or hacked into other systems.

Beyond cybersecurity, Bailey cautioned that the global economy is vulnerable to a market correction. He pointed to high valuations of AI companies, increasing cross investment between AI firms and hyper scalers, and ballooning levels of government and private sector debt. These vulnerabilities are compounded by energy supply shocks and inflation expectations stemming from the ongoing US Iran war.

While the international warning focused on stability, the British government simultaneously moved to expand its domestic capabilities. Chancellor John Healey announced a 100 million pound fund to support British AI start ups. This initiative aims to develop sovereign AI capacity to reduce dependence on foreign infrastructure and improve public services such as the NHS, cybersecurity, and defense.