Financial Stability Board (FSB) Chair and Bank of England Governor Andrew Bailey warned on Monday that artificial intelligence poses an immediate threat to global financial stability by dramatically altering the speed, scale, and cost-effectiveness of cyberattacks. In a letter to G20 finance ministers and central bank governors, Bailey emphasized that many jurisdictions lack adequate regulatory frameworks to safely manage advanced AI deployments. He also cautioned that the financial industry’s heavy reliance on a small cluster of dominant technology vendors introduces systemic vulnerabilities that could erode market confidence.

Regulators are increasingly concerned that advanced AI could accelerate the exploitation of software vulnerabilities, placing immense strain on financial institutions’ operational resilience and emergency recovery systems. Highlighting recent safety incidents, Bailey pointed to the automated breach of AI platform Hugging Face by an autonomous agent in July, as well as the U.S. government’s strict national security controls surrounding the release of Anthropic’s Mythos model. Consequently, the FSB is advocating for globally coordinated standards to ensure that technological advancements are matched by robust security controls and responsible model deployment.

Beyond cyber risks, Bailey reiterated warnings regarding broader financial fragility, citing elevated valuations in AI-related equities, vulnerabilities in sovereign debt markets, and rising leverage across equity trading. He noted that these structural pressures were underscored by recent U.S. Treasury interventions designed to cap surging long-term bond yields, signaling persistent friction across global markets.

Click here for more on Technology