Andrew Bailey, Governor of the Bank of England and Chair of the Financial Stability Board (FSB), wrote in a letter to G20 leaders and central banks that the most advanced artificial intelligence models present a direct risk to the global financial system. The Actuary reported on the contents of his letter.
How the risk manifests
Bailey warned that the increasing autonomy and problem‑solving capabilities of cutting‑edge AI models raise their threat potential. He emphasized that these risks do not stop at national borders: cyberattacks can propagate across jurisdictions via shared technology providers, common infrastructure and cross‑border financial operations.
He also noted that differences between countries in regulatory frameworks, cyber‑defence capabilities and recovery capacity are themselves sources of vulnerability. Advanced AI can fundamentally change the speed, scale and cost structure of cyber risks, potentially undermining market confidence at a systemic level — a risk amplified where external technology providers are highly concentrated.
Call for preparedness
In his letter, Bailey urged financial institutions, market infrastructure operators and technology providers to prepare for a threat environment in which vulnerabilities increase, defensive measures must be deployed more rapidly, and these developments create significant operational resilience challenges.
He stressed the importance of ensuring recovery capabilities for critical systems and data following a major cyber incident, and preparing for scenarios in which multiple firms or a shared platform are targeted simultaneously.
Other financial stability concerns
Bailey set out additional concerns related to financial stability. He warned that the fragility of government bond markets, vulnerabilities in the private‑credit sector, and stretched asset valuations expose markets to the risk of a disorderly correction that could propagate internationally.
Related event
Related themes will be discussed at the Portfolio Banking Technology 2026 conference on November 10, which covers agentic AI, fintech competition and digital banking. An AI assistant contributed to the preparation of this article; the final text was edited and verified by our journalist.
The facts above are reported based on The Actuary's coverage.
