Bank of England governor warns of AI-related financial system risks
SiliconANGLE Maria Deutscher ● Covered by 3 sources
Bank of England governor Andrew Bailey warned AI could hit financial markets and banks. He says the danger runs from shaky AI valuations to cyberattacks on shared tech.
Based on reporting by SiliconANGLE, Maria Deutscher — read the original for the full story.
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Bank of England governor Andrew Bailey is now publicly worried about something bigger than the usual AI buzz: the plumbing underneath finance. In a letter to G20 finance ministers and central bank governors, he warned that advanced AI could threaten financial infrastructure. The document landed just before the group met in Asheville, North Carolina, and Bailey wrote it in his role as chair of the Financial Stability Board.
His main message was not that AI itself will blow up the system, but that the system already has weak spots. He pointed to “stretched asset valuations” in the AI market and debt tied up in circular investment deals between AI companies and hyperscalers. That kind of setup can look sturdy right up until it doesn’t.
Bailey spent most of the letter on cybersecurity, and that is where the warning gets more concrete. Large language models can help attackers find software flaws faster, and financial firms are highly interconnected. They trade with each other constantly, and many rely on the same outside technology providers. If one of those providers is breached, the damage can spread quickly.
He told firms to plan for incidents that hit several institutions or suppliers at once, and to build workflows that can restore critical systems and data from bare metal after a major cyber event. He also said banks will need to patch faster because AI can surface vulnerabilities so quickly, even though patches still need to be tested before they go live. Bailey closed with the point that AI can strengthen cyber defense, but only if resilience keeps pace with capability.
The timing matters. Last week, more than 100 banks, tech firms and other companies signed a public warning about AI cybersecurity risks, and they expect LLM-driven hacking campaigns to rise sharply in the coming months. The direction of travel is clear: the industry is trying to race ahead with AI, while also admitting that AI is making the floor less stable.
My take — AI-written commentary, not fact-checked reporting
This is the part of AI nobody likes to put on a conference slide: the same tools being sold as productivity magic are also making finance easier to break. Bailey is right to drag the conversation away from hype and back to shared infrastructure, where one weak provider can ruin everyone’s afternoon. The market loves talking about models; regulators have to worry about the pipes.
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