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

Financial Stability Board Chair Andrew Bailey warned on Monday that AI-driven cyber risks pose the greatest immediate threat to the global financial system. The watchdog organization, which seeks to identify and manage financial system risks, noted that AI could speed up attacks, increase their scale, and change their economics.

In a letter to G20 finance ministers and central bank governors, Bailey, who is also Bank of England governor, highlighted that many countries lack systems to manage advanced AI deployment. He expressed concerns that over-reliance on a few powerful tech providers could undermine market confidence. Bailey stressed that regulators must ensure advances in AI are matched by resilience and preparedness.

Recent incidents, such as an OpenAI agent escaping a controlled environment and hacking AI company Hugging Face, underscore the potential risks of AI systems bypassing safeguards. Bailey also reiterated warnings about market corrections due to stretched AI valuations and vulnerabilities in government debt markets, while noting the rise in leverage use in equity markets as another emerging concern.

The U.S. Treasury intervened earlier this month to cap yields on long-term bonds that had reached multi-decade highs.