AI Cyber Risk Declared Top Threat to Global Financial Stability by FSB Chair Andrew Bailey

AI-driven cyber risk is top concern for global financial stability, watchdog says

LONDON, Aug 31 (Reuters) - Financial Stability Board Chair Andrew Bailey said on Monday that the impact of AI on cyber risk was the most immediate concern for the global financial system, saying the technology could change the speed, scale and economics of an attack. The FSB is a global watchdog that seeks to identify and manage ⁠risks in financial systems. In a letter to G20 finance ministers and central bank governors ahead of meetings this week, Bailey, who also serves as the Bank of England governor, said many countries do not have systems in place to manage the deployment of advanced artificial intelligence models. The financial sector's dependence on a handful of powerful tech providers could undermine system-wide market confidence, he added. The comments highlighted concerns among regulators that advanced AI could accelerate the discovery of cyber vulnerabilities, forcing faster patching and creating potential operational and resilience challenges ⁠if testing and recovery processes are unable to adapt safely. His comments follow the U.S. administration's tightly controlled rollout of Anthropic's powerful Mythos model, restricting it at one point to only U.S. nationals. "Recent developments highlight the importance of ensuring that advances in capability are matched by resilience and preparedness," ⁠he said. Supporting safe and responsible model release "on a global basis" should be a priority, he said. In July, an OpenAI agent escaped a controlled testing environment and hacked AI company Hugging Face, raising concerns about ⁠the potential for AI systems to circumvent safeguards. Bailey reiterated prior warnings about the risk of potential market corrections, citing stretched AI valuations and frailties in government debt markets, while ⁠flagging as an emerging concern the increase in the use of leverage in equity markets. The U.S. Treasury earlier this month intervened to cap yields on long-term bonds that had reached multi-decade highs. Reporting by Phoebe Seers; Editing by Cynthia Osterman Our Standards: The Thomson Reuters Trust Principles., opens new tab

Bank of England chief warns new AI models threaten global financial stability

* Bank of England Governor Andrew Bailey has warned that frontier AI could materially increase cyber risks to the global financial system. * Financial firms may need stronger defenses against faster, larger-scale cyberattacks and disruption. * The FSB chair urged governments to strengthen safeguards as AI capabilities rapidly advance. Andrew Bailey, governor of the Bank of England (BOE), during a Bloomberg Television interview at the Reykjavik Economic Conference in Reykjavik, Iceland, on Friday, May 29, 2026. Betty Laura Zapata | Bloomberg | Getty Images The growing threat posed by advanced artificial intelligence models could trigger a disorderly correction in global financial markets, according to Bank of England Governor Andrew Bailey. In a two-page letter published Monday to G20 finance ministers and central bank governors, Bailey said the emergence of so-called "frontier AI models" is showing "increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities." Writing in his capacity as chair of the Financial Stability Board, an international body that coordinates policy and makes recommendations to national authorities, Bailey identified the potential impact of frontier AI -- which refers to the most advanced AI models -- on cyber risk as "the most immediate concern" for the financial system. "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 said. "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," he added. The letter adds to a growing chorus of warnings about the dangers associated with advanced AI and comes shortly after a series of high-profile incidents in which flagship models tested by Anthropic and OpenAI breached testing safeguards. Financial institutions and technology providers will need to improve vulnerability management, response and recovery capabilities -- "and prepare for more severe scenarios involving simultaneous disruption across multiple firms or shared technology dependencies," Bailey said. Alongside new AI models, Bailey cited "fragilities" in sovereign debt markets, the growing use of debt by investors in equity markets and stretched asset valuations, particularly AI-related investments, as among his concerns. The U.S. is hosting the G20 summit in North Carolina this week, convening finance ministers, central bank governors and other senior officials from the world's leading economies to discuss global economic priorities. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

AI-driven cyber attacks are now the top risk to the financial system, the FSB says

Andrew Bailey put the assessment to G20 finance ministers in writing, alongside warnings about AI valuations and leverage. The chair of the Financial Stability Board has told G20 finance ministers that what artificial intelligence does to cyber risk is now the most immediate threat to the global financial system. Andrew Bailey set out the assessment in a letter ahead of this week's meetings, Reuters reported on Monday. His argument is more about economics, as AI can change the speed, the scale and the cost of an attack, which is a different proposition from attackers simply having better tools. Bailey chairs the FSB alongside his day job as governor of the Bank of England, and the board exists to spot risks that cross borders and sectors before they become crises. Placing cyber above every other item on its list is not a routine move. The letter cited the incident in July when an OpenAI agent escaped its testing environment and hacked Hugging Face, which remains the clearest public example of a model doing unsupervised damage. The IMF reached a similar conclusion earlier this year, warning that AI is already fuelling cyberattacks against financial institutions. Two multilateral bodies arriving independently at the same ranking is the part supervisors tend to notice. Moreover, Bailey warned that many countries have no system for managing how advanced AI models get deployed inside their financial sectors. That is a gap in governance rather than in technology, and it is the kind of gap the FSB was built to name. A second concern runs alongside the first. The financial sector now depends on a handful of technology providers, and that concentration is itself a risk to confidence, because a failure at one supplier propagates through institutions that have no alternative to switch to. The board has been circling this for months. Bailey asked Anthropic to brief the FSB on what its Mythos model had been finding in May, after the system turned up thousands of high-severity vulnerabilities in widely used software. A briefing is a request for information, whereas a letter to G20 ministers naming a top concern is a regulator putting a position on the record before anyone asks. The cyber warning did not arrive alone. Bailey flagged stretched valuations in AI assets, frailties in government debt markets, and rising leverage in equity markets, a combination that describes an economy borrowing heavily against expectations of the same technology. The US Treasury has already intervened to cap bond yields that had reached multi-decade highs, which is the sort of action that tends to precede a broader conversation about market plumbing. Central bankers have been converging on this territory for a while. Christine Lagarde has argued that AI could trigger financial crises and called for governance modelled on Cold War non-proliferation, which is a considerably more dramatic framing than Bailey's. Agentic systems are what turns this from a forecast into a supervisory problem. A model that can plan, act and persist across systems does not need a human operator at each step, which removes the labour cost that has always limited how many targets an attacker can work at once. The FSB has no power to compel anyone. It sets standards, publishes assessments and relies on national regulators to act, which means the practical effect of this letter depends entirely on what finance ministries choose to do with it. For European banks the relevant deadlines are already fixed. The Cyber Resilience Act took effect in September with vulnerability reporting windows measured in hours, and DORA has been governing operational resilience in financial services since 2025. Bailey's letter arrived before the G20 sessions rather than after them, which is the point of it. Whether the ministers reading it agree that this belongs at the top of the list is the thing worth watching this week.

Advanced AI threatens global financial stability, says Bank of England boss

Andrew Bailey warns G20 members about risk of cyber-disruption spreading 'across jurisdictions' 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 via cyber-disruption that "can spread across jurisdictions". 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.

FSB chair Andrew Bailey warns G20 on AI cyber risk

Financial Stability Board Chair Andrew Bailey warned G20 finance ministers and central bank governors on Monday that the potential impact of frontier AI on cyber risk is the most immediate threat facing the global financial system. In a letter published ahead of the G20 meeting in Asheville, North Carolina, Bailey said frontier AI models -- the most advanced AI systems -- are demonstrating growing autonomy and more capable problem-solving, along with an expanding range of threat capabilities. "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 said in a statement.

AI-driven cyber risk is top concern for global financial stability, watchdog says

In a letter to G20 finance ministers and central bank governors ahead of meetings this week, Bailey, who also serves as the Bank of England governor, said many countries do not have systems in place to manage the deployment of advanced artificial intelligence models. Financial Stability Board Chair Andrew Bailey said on Monday that the impact of AI on cyber risk was the most immediate concern for the global financial system, saying the technology could change the speed, scale and economics of an attack. The FSB is a global watchdog that seeks to identify ⁠and manage ⁠risks in financial systems. In a letter to G20 finance ministers and central bank governors ahead of meetings this week, Bailey, who also serves as the Bank of England governor, said many countries do not have systems in place to manage the deployment of advanced artificial intelligence models. The financial sector's dependence on a handful of powerful tech ⁠providers could undermine system-wide market confidence, he added. The comments highlighted concerns among regulators that advanced AI could accelerate the discovery of ⁠cyber vulnerabilities, forcing faster patching and creating potential operational and resilience challenges if testing and recovery processes are unable to adapt safely. His comments follow the U.S. administration's tightly controlled rollout of Anthropic's powerful Mythos model, restricting it at one point to only U.S. nationals. "Recent developments highlight the importance of ensuring that advances in capability are matched by resilience and preparedness," he said. Supporting safe and responsible model release "on a global basis" should be a priority, he said. In July, an OpenAI agent escaped a controlled testing environment and ⁠hacked AI company Hugging Face, raising concerns about the potential for AI systems to circumvent safeguards. Bailey reiterated prior warnings about the risk of potential market corrections, citing stretched AI valuations and frailties in government debt markets, while flagging as an emerging concern the increase in the use of leverage in equity markets. The U.S. Treasury earlier this month intervened to cap yields on long-term bonds that had reached multi-decade highs.

AI cyber risk is biggest immediate threat to global financial stability: FSB chair Andrew Bailey

Financial Stability Board Chair Andrew Bailey highlighted AI's immediate cyber risk concerns. He warned AI could accelerate cyberattacks, impacting global financial systems. Many nations lack systems to manage advanced AI deployment effectively. Stretched AI company valuations and debt market vulnerabilities also pose risks. The impact of artificial intelligence (AI) on cyber risk is the most immediate concern for the global financial system, Financial Stability Board (FSB) Chair Andrew Bailey said on Monday, warning that AI could change the speed, scale and economics of cyberattacks. Bailey, who is also governor of the Bank of England, made the comments in a letter to G20 finance ministers and central bank governors ahead of meetings this week, Reuters reported. The FSB is a global financial watchdog that monitors risks to the international financial system and coordinates regulatory responses. Also Read: Russian-speaking cybercriminals used SpaceX's Cursor AI tool to hack seven companies Bailey said many countries do not yet have systems in place to manage the deployment of advanced AI models. He also warned that the financial sector's dependence on a small number of powerful technology providers could undermine confidence across financial markets. "Recent developments highlight the importance of ensuring that advances in capability are matched by resilience and preparedness," Bailey said, according to Reuters. He said supporting the safe and responsible release of AI models "on a global basis" should be a priority. AI could accelerate cyberattacks Regulators are increasingly concerned that advanced AI could accelerate the discovery of cyber vulnerabilities, forcing companies and financial institutions to patch systems faster. The growing speed of AI-driven attacks could also create operational and resilience challenges if organisations are unable to adapt their testing, safeguards and recovery processes at the same pace. Bailey's warning comes as governments and regulators grapple with the rapid development of increasingly capable AI systems. The comments also follow the US administration's tightly controlled rollout of Anthropic's powerful Mythos model, which was at one point restricted to US nationals. Also Read: AI security market to hit $4.8 billion in 2027, grow 68.7%: Report In July, an AI agent developed by OpenAI escaped a controlled testing environment and hacked AI company Hugging Face, raising concerns about the ability of AI systems to circumvent safeguards and operate at machine speed. AI valuations pose another financial stability risk Bailey also reiterated earlier warnings about potential market corrections, pointing to stretched valuations around AI companies and vulnerabilities in government debt markets. He flagged the growing use of leverage in equity markets as an emerging concern. The warnings come amid heightened scrutiny of the broader financial impact of the AI investment boom. Rapid increases in spending and valuations around AI have raised questions about whether markets are pricing in overly optimistic expectations for the technology. Bailey's comments underline a broader challenge for financial regulators: ensuring that the rapid development and deployment of AI does not outpace the systems designed to manage its cybersecurity, operational and financial risks.

New AI models pose growing risk to financial stability, FSB chief Bailey warns By Investing.com

Investing.com -- New artificial intelligence models present a growing threat to the stability of the global financial system, and ensuring their safe release should be a priority, the head of the Financial Stability Board (FSB) said Monday in a letter to G20 regulators. Andrew Bailey, who also serves as Bank of England governor, sent the letter to central bank governors and finance ministers across the Group of 20 economies. It follows several recent incidents in which new models from companies including OpenAI, Anthropic and Meta Platforms (NASDAQ:META) were used to hack other organizations via the internet. Regulators are concerned that emerging AI models could uncover previously unknown vulnerabilities in financial institutions' cybersecurity defenses and adapt quickly to bypass newly implemented fixes. The European Central Bank has directed eurozone banks to submit an action plan addressing the heightened risks from new AI models by October 31. "The risk landscape has been further complicated by the emergence of frontier AI models, which are showing increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities," Bailey wrote. G20 finance officials are scheduled to meet later Monday in Asheville, North Carolina. The FSB serves as the coordinating body for financial regulators across the G20. Bailey cautioned that disruptions stemming from AI would not be contained within national borders, given the shared technology providers and infrastructure that underpin the global financial system. "Differences in legal frameworks, cyber capability, resilience and recovery capacity across jurisdictions could therefore have consequences well beyond the jurisdiction in which an incident originates and may themselves become a source of vulnerability," he wrote. To limit the risk of an AI-driven cyberattack spreading through the global financial system, Bailey said regulators must prioritize protocols governing the safe release of new models. "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," he wrote. Bailey added that banks and other financial firms should ready themselves for "more severe scenarios involving simultaneous disruption across multiple firms or shared technology dependencies." He said such preparations must include the ability to rapidly rebuild computer systems following severe damage. "These developments reinforce the importance of robust response and recovery capabilities, including the ability to restore critical systems and data from 'bare metal' following a significant cyber incident," Bailey said.

Bank of England warns on frontier AI: cyber shock could hit global finance

Andrew Bailey now runs the Bank of England and chairs the Financial Stability Board. He's warned G20 finance ministers that frontier AI could become the next major threat to global financial stability, driving cyber-disruption across borders and shaking confidence in banks and markets. His argument is straightforward: newer models bring more autonomy, stronger problem-solving and, in the wrong hands, more offensive power. That means faster, cheaper and larger attacks, with contagion jumping from one bank to a payments provider or market utility before companies or regulators can get it under control. The exposure is already there. 87% of financial firms have at least partly integrated these tools, and 41% have fully embedded them in fraud monitoring, customer service, compliance and trading, even though governance still lags behind. At the same time, Amazon Web Services (AWS), Microsoft Azure and Google Cloud control about two-thirds of the cloud market, so an outage, breach or software fault could ripple into a multi-bank failure. Add 5.9 million average sector breach costs, 10.5 trillion projected 2026 cybercrime losses, and the fact that 88% of banking leaders say machine learning has already made fraud more sophisticated, and Bailey's warning stops sounding hypothetical. If you bank online, this lands pretty close to home. The US Treasury Department issued a framework in February 2026. The European Union (EU) started enforcing high-risk AI rules in August, while the European Central Bank (ECB) demanded action plans. China's National Financial Regulatory Administration (NFRA) put out guidance in June and July. Then came the reported July agent escape that hacked Hugging Face, which only made the urgency harder to ignore.

AI could cause global economic downturn, BoE governor warns

(Alliance News) - Artificial intelligence could unleash a global economic downturn, the governor of the Bank of England has warned in a letter to governments from around the world. Andrew Bailey said that a "future market correction" could spread across the world if the AI bubble bursts, in a letter to G20 finance ministers who are currently meeting in North Carolina, USA. Bailey warned in his letter of the "volatility" caused by the impact of energy shocks from the US-Iran war. Writing in his capacity as chair of the Financial Stability Board, an international watchdog, he said that "markets remain vulnerable to a potentially disorderly correction that could spread across borders, particularly given fragilities in sovereign debt markets". He added: "The issue is not simply that investors are borrowing more, but that leverage is interacting with high valuations and market concentration, in particular the increasing cross-investment between artificial intelligence (AI) companies and hyperscalers, 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's warning comes as Chancellor John Healey announced a GBP100 million fund aimed at backing British AI start-ups. The fund is part of the government's efforts to grow the country's so-called "Sovereign AI" capacity, homegrown AI technology aimed at ensuring the UK is not dependent on services and infrastructure developed abroad. Ministers want to see companies compete for the funding to help tackle challenges like cutting waiting lists in the NHS, and improving patient care, as well as bolstering cybersecurity and defence. Healey said: "Britain is home to some of the most innovative AI companies in the world, and this government is backing them to start, scale and succeed here in the UK. "This first-of-its-kind competition will help make sure more of the benefits of AI are felt in every UK postcode. "As G20 countries seek to make the most of AI opportunities, I'm determined Britain has a lead role in harnessing this technology to drive more jobs, better public services, and growth that's UK-wide." By David Lynch, Press Association Political Correspondent

G20 Warned Of Growing Threat to Financial Stability Posed By New AI Models

New artificial-intelligence models pose a growing threat to the stability of the global financial system and measures to ensure their safe release should be a priority, the head of the G20's Financial Stability Board wrote in a letter to regulators from the world's leading economies Monday. Addressed to central bank governors and treasury chiefs from the Group of 20 largest economies, the letter from Andrew Bailey follows a series of incidents over recent months in which new models from companies including OpenAI, Anthropic and Meta Platforms have used the internet to hack other organizations. Regulators worry that new models could find previously unidentified gaps in the cybersecurity systems of financial institutions, and quickly adapt to circumvent new fixes. The European Central Bank has called on banks in the eurozone to present a plan of action to address the increased threats posed by new AI models by October 31. "The risk landscape has been further complicated by the emergence of frontier AI models, which are showing increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities," wrote Bailey, who is also governor of the Bank of England. G20 finance officials meet later Monday in Asheville, North Carolina. The FSB is the coordinating body for G20 financial regulators. Bailey told officials that potential disruptions triggered by AI wouldn't stop at national borders, given shared technology providers and infrastructure. "Differences in legal frameworks, cyber capability, resilience and recovery capacity across jurisdictions could therefore have consequences well beyond the jurisdiction in which an incident originates and may themselves become a source of vulnerability," Bailey wrote. To reduce the risk of a cyber attack by or employing an AI model spreading across the global financial system, Bailey told regulators that efforts to ensure the safe release of new models should be a priority. "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," he wrote. Bailey said banks and other financial institutions should prepare for "more severe scenarios involving simultaneous disruption across multiple firms or shared technology dependencies." Included in those preparations should be the capacity to quickly restore computer systems that have suffered severe damage. "These developments reinforce the importance of robust response and recovery capabilities, including the ability to restore critical systems and data from 'bare metal' following a significant cyber incident," Bailey wrote.