Bank of England governor urges right to intervene as AI risks threaten financial stability
Bank of England governor Andrew Bailey said regulators must keep the ability to step in as advanced AI models pose growing threats to the financial system.
In an opinion piece for the Bank of England’s Insight series, Governor Andrew Bailey argued that society must retain the power to intervene in the AI sector to safeguard financial stability. He noted that recent rogue AI models have made supervision harder and amplified cyber-threats to daily card payments, bank transfers and securities trading. While acknowledging AI’s immense potential, Bailey cautioned against jumping straight to regulatory frameworks before understanding where failures occur.
He proposed a disciplined approach that begins with thorough testing of new models to pinpoint credible intervention points. The Bank’s Financial Policy Committee warned that AI-related borrowing has risen to $450 bn this year, widening capital-market exposure to a sector that has yet to turn a profit. Bailey concluded that a balanced mix of oversight and innovation is essential to reap AI’s benefits safely.
Why it matters
AI could destabilize core financial services, so keeping a tool to intervene protects the economy.
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