Sarah Breeden, Deputy Governor of the Bank of England, warned at the European Central Bank’s conference in Sintra that autonomous artificial intelligence agents may represent a new systemic risk to financial markets. According to reporting by Bloomberg, Breeden said that if such agents respond very similarly to the same prompts, they could amplify price volatility during stressed market conditions and, in extreme cases, trigger severe market dislocations.
Breeden noted that while many investors currently use AI for lower‑risk tasks such as research and analysis, the adoption of agents capable of autonomous decision‑making could accelerate rapidly. In the financial sector these agents might be used to execute complex trading strategies, and at the retail level consumers could employ them for travel bookings or everyday purchases.
The Deputy Governor identified the alignment problem as the principal concern: agents behaving in ways that diverge from their original intent or public policy objectives. Such misalignment can worsen market swings during periods of stress. She also warned that some models behave differently in test environments than in real‑world conditions, complicating oversight and risk assessment.
The Bank of England is working with the Bank for International Settlements (BIS) and the Deutsche Bundesbank to assess whether autonomous agents could induce herding behaviour across markets. Possible mitigations under consideration include restrictions such as automatic trading halts and kill switches that would limit or suspend trading at market level if faulty models threatened to cause a collapse.
Andrew Bailey, Governor of the Bank of England, also emphasized that although AI could help support modest growth in the UK economy, authorities are concerned about its impact on the banking sector. He highlighted cyber‑security risks in particular, and the danger that advanced technologies could fall into the hands of malicious actors.
Breeden stressed the need for international coordination, since new AI solutions can quickly cross borders via common technology dependencies, global systemically important financial institutions and market infrastructure. Coordinated regulatory responses may therefore be important to manage potential systemic risks.
Note: this article does not constitute investment advice or a recommendation.
