We should be AI optimists, says Bank of England deputy

Sarah Breeden, deputy governor for financial stability at the Bank of England, has called for optimism surrounding artificial intelligence (AI) and believes it is the "best pathway" to securing economic growth. Speaking in an interview with the Atlantic Council during IMF-World Bank meetings in Thailand, Breeden emphasized the importance of thinking ahead on the future use cases of AI and how the UK might need to act now to be resilient against unexpected outcomes.

She highlighted the potential risks posed by AI in the hands of bad actors or rogue agents, as well as the possibility of AI agents going rogue. Breeden also stressed that AI as a general-purpose technology and innovation should be embraced as a means of growth. Her comments come in the wake of previous warnings from the Bank on AI risks, with Financial Policy Committee members discussing the potential impact on stock markets following rapid AI growth.

Bailey, the governor, has called for increased testing of frontier AI models before public release, expressing concerns over the closed-loop nature of these technologies. In addition to discussing AI, Breeden addressed the Bank's digital currency project, the retail digital pound, which is still in development. The project aims to design a central bank digital currency for the UK, with a detailed blueprint and assessment expected by the end of the year.

Breeden explained the initial focus of the project was to understand how innovations could benefit users and ensure the singleness of money. She suggested that the decision on whether to proceed with the digital pound may depend on whether stablecoins and commercial bank money can deliver similar benefits, particularly in terms of value anchoring.

While no final decision has been made, Breeden acknowledged that the UK may not need to lead this initiative if alternative solutions prove effective.