AI boom could trigger market shocks, Bank of England boss warns

The Bank of England's governor, Andrew Bailey, has cautioned that artificial intelligence (AI) could lead to financial market shocks in the UK. Bailey emphasized that central banks are closely monitoring the significant investments being made in AI, with the technology being valued as multi-trillion dollar businesses. He noted that while AI has great potential to boost economic growth, it also brings substantial risks, and the market could see asset price corrections.

Bailey highlighted the investments in AI by major tech companies like Google, Alphabet, Meta, Microsoft, and Amazon, along with AI firms Anthropic and OpenAI. He acknowledged the large amounts of money flowing into the sector due to high expectations of its capabilities. However, Bailey warned that not every company developing AI will succeed, citing historical examples such as the decline of Netscape.

The governor also pointed out other AI-related risks, including the potential misuse of the technology for cyber attacks and the creation of deepfakes. He stressed the need to trace these issues back and sought collaboration from the tech sector. Despite the risks, Bailey acknowledged AI's potential benefit in speeding up work for the Monetary Policy Committee, which sets interest rates, noting that it serves as a valuable tool for policymakers.