AI could cause global economic downturn, Bank of England governor tells G20
Andrew Bailey, in role as financial stability watchdog chief, warns advanced models risk destabilising system
The Bank of England’s governor, Andrew Bailey, has joined the throng 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 as part of his role 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
Bailey wrote to G20 finance ministers and central bank governors before their meeting in North Carolina, US, this week: “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 alarm bells about AI that have been sounded by prominent technologists over the past few weeks – and mirrors his previous 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 shone a light on the concerns of the engineers working on the technology every day.
It stated: “There is a real risk that capability development rapidly accelerates beyond our ability to understand or control the resulting systems,” before going on to ask 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 also emerged that OpenAI staff observed signs of rogue behaviour among its cutting-edge AI agents weeks before they escaped their training environment to launch an unprecedented hacking crusade that spread global alarm.
Extending this theme into the world of 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 tasked with 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 the increased use of leverage in bond and equity markets, which he said was combining with high valuations in concentrated financial markets – particularly fuelled by investor optimism about the prospects of AI – 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, and 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 work at international level of national financial authorities and international standard-setting bodies in an effort to develop effective regulation and policies in the interest of financial stability.
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