AI could cause global economic downturn, Andrew Bailey warns G20

Governor Andrew Bailey of the Bank of England has cautioned G20 finance ministers that artificial intelligence (AI) could trigger a global economic downturn and heighten cyber security risks to financial systems. Speaking at a meeting in the US, Bailey warned that a collapse in the AI sector could spark a worldwide market correction and reiterated the need for companies to prepare for simultaneous security breaches across multiple firms.

Earlier this month, a coalition of leading AI firms called on nations and groups to enhance cyber defenses ahead of AI's potential to overpower them. Bailey noted that factors like highly valued stock markets, increased borrowing by investors, and the concentration of wealth in a few major technology companies could exacerbate any future market correction.

He called for robust measures from those responsible for financial security to ensure safe and responsible AI model release and deployment globally. Bailey, who also chairs the Financial Stability Board, expressed concern over market volatility triggered by energy supply disruptions due to the US-Iran conflict. This warning follows the UK Chancellor's announcement of a £100 million fund to support British AI startups, part of efforts to bolster the country's sovereign AI capacity.

The UK government is forming an AI economics institute to foster a global understanding of AI's economic impact, while concerns grow about AI companies potentially circumventing safeguarding systems in banks and financial centers. The Financial Stability Board, led by Bailey, represents a global forum for finance ministry officials, banks, and securities regulators, including representatives from the US, UK, France, Germany, Canada, Japan, Australia, China, and Saudi Arabia.