FSB Chair Andrew Bailey warns of AI threats to financial stability

Emerging AI models pose a growing threat to financial stability and economic growth, Financial Stability Board (FSB) Chair and Governor of the Bank of England Andrew Bailey has warned.

The letter was sent on 28 August to G20 finance ministers and central bankers ahead of their meeting on Monday and Tuesday in Asheville, North Carolina, US.

Bailey wrote that the FSB will remain "focused on identifying emerging vulnerabilities, strengthening resilience and ensuring that innovation is consistent with financial stability," as many jurisdictions do not have sufficient protocols in place.

His warning comes amid a period of profound global instability and uncertainty that is heightening market volatility.

Conflict in the Middle East is driving up energy prices and fuelling inflation, while large-scale AI investments in the United States are adding further inflationary pressure. At the same time, unprecedented trade decisions by US President Donald Trump are contributing to an increasingly unpredictable economic environment.

In this scenario, a new generation of sophisticated AI models is emerging. These systems are capable of identifying and exploiting digital vulnerabilities in complex systems – such as banking infrastructure and other sensitive servers – with potentially catastrophic consequences for the economy.

One notorious example is Mythos, a model developed by Anthropic, which has advanced autonomous coding and cybersecurity capabilities. Unveiled in April 2026, the model is not available for public use due to the significant potential risks it poses.

"Frontier AI may have the ability materially to alter the speed, scale and economics of cyber risk, which could undermine market confidence system-wide, especially due to highly concentrated third-party service providers," Bailey wrote.

"Taking appropriate steps to support safe and responsible model release and deployment on a global basis should in my view be a priority and would benefit all sectors of the economy, including by supporting financial stability and economic growth."

Bailey also noted that "AI will not respect national borders", meaning that while governments can legislate and enforce regulations at national level, an AI disruption with financial stability implications can have a global impact wherever it begins.

"Differences in legal frameworks, cyber capability, resilience and recovery capacity across jurisdictions could therefore have consequences well beyond the jurisdiction in which an incident originates and may themselves become a source of vulnerability," Bailey wrote.

The FSB chair exhorted firms and authorities to prepare for "a threat environment characterised by a higher volume of vulnerabilities and a faster pace of patching" and to adapt safety systems.

The next G20 meeting will occur in Miami, Florida on 14-15 December.