Bailey warns AI poses cyber risk to finance

Bank of England Governor Andrew Bailey has warned that frontier AI models present cyber security risks which could affect global financial stability. In a letter to G20 finance ministers and central bank governors, Bailey called for states to take steps to ensure safe and responsible model releases and deployments.

Writing in his capacity as chair of the Financial Stability Board, Bailey stated that many jurisdictions lack the protocols to manage the development and deployment of advanced frontier AI models. This absence heightens risks for the financial sector and beyond, he argued.

Call for coordinated action

Bailey's call to more closely manage the rollout of AI models as a priority follows recent incidents involving technology from Anthropic and OpenAI. In those cases, the technology reportedly went rogue and hacked into outside organisations.

He noted that AI risks will not respect national borders. "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 wrote.

Risks to financial infrastructure

The warning highlights specific dangers to the financial system's operational backbone. Bailey told financial institutions, market infrastructures, and technology providers that they must strengthen their vulnerability management, response, and recovery capabilities. They also need to prepare for more severe scenarios involving simultaneous disruption across multiple firms or shared technology dependencies. Industry players must ensure the ability to restore critical systems and data from 'bare metal' following a cyber incident, as well as the resilience amongst critical third-party technology providers.

Contrast with US approach

Bailey's push for stronger oversight contrasts with the current regulatory approach in the United States. There, a recent executive order on AI signed by Donald Trump does not grant the government the power to block the release of models. It instead offers only a voluntary framework for early inspection ahead of rollout.

The Bank of England governor's letter highlights a gap between the perceived urgency of the threat and existing international policy frameworks. He emphasized the need for resilience among critical third-party technology providers upon which the global financial system increasingly depends.