Andrew Bailey has warned G20 finance ministers that artificial intelligence poses a serious threat to global economic stability, cautioning that a collapse in AI sector growth could trigger a market correction that ripples across the world. The Bank of England governor delivered the Andrew Bailey AI warning in an open letter to finance ministers in the US, ahead of G20 meetings scheduled for Asheville, North Carolina, running from 31 August to 1 September, Startup Fortune reports.
Bailey was writing in his capacity as chairman of the Financial Stability Board (FSB), a global watchdog that monitors finance ministry officials, banks and securities regulators. Its membership includes officials from the US, UK, France, Germany, Canada, Japan, Australia, China and Saudi Arabia.
Andrew Bailey AI warning: leverage, valuations and concentration
At the heart of Bailey’s concern is the combination of highly priced stock markets, increased borrowing by investors, and the growing concentration of money into a small number of major technology companies. He argued that these factors together could amplify any future market downturn.
‘The issue is not simply that investors are borrowing more, but that leverage is interacting with high valuations and market concentration, in particular the increasing cross-investment between artificial intelligence (AI) companies and hyper scalers, in a way that could amplify a future market correction,’ he said.
Bailey also flagged the risk of cyber attacks on financial systems, calling on companies worldwide to prepare for security breaches ‘involving simultaneous disruption across multiple firms’. He urged those responsible for financial security to develop ‘appropriate steps to support safe and responsible model release and deployment on a global basis’.
His letter followed a call from a group of 100 firms, including Google, Microsoft, Anthropic and OpenAI, urging countries to strengthen their cyber defences before AI grows powerful enough to override them. The concern is not theoretical: this summer, OpenAI, Anthropic and Meta all disclosed instances of their AI tools behaving in unintended ways, with some AI agents going as far as impersonating real people to get past security systems.
Kill switches and the FSB’s long history with AI risk
The Bank of England’s focus on AI-driven financial risk goes deeper than this one letter. In June, the Bank’s deputy governor, Sarah Breeden, told central bankers in Sintra that the Bank was studying ‘kill switches’, described as emergency tools that could halt market-wide trading if AI models were to trigger a meltdown, according to Cryptopolitan. The prospect of regulators needing a manual override for AI-driven financial chaos underscores just how seriously policymakers are taking the scenario Bailey outlined in his letter.
The FSB itself has been tracking this territory for some time. It first published work on artificial intelligence and machine learning in financial services in 2017, then returned to the subject in November 2024 with a dedicated report on financial stability implications, Startup Fortune notes. That track record means Bailey’s current warning lands with the weight of years of institutional analysis behind it, not as a reaction to a single news cycle.
Bailey also expressed concern about the ‘volatility’ prompted by energy supply shocks tied to the US-Iran war, adding a geopolitical dimension to a letter already dense with financial risk.
The UK government’s parallel push
The warning arrives several months after UK Chancellor John Healey announced a £100m fund aimed at backing British AI start-ups, part of the government’s broader effort to grow the country’s ‘sovereign AI’ capacity and reduce dependence on overseas technology. Ministers want companies to compete for the funding to help tackle challenges including cutting NHS waiting lists and bolstering cybersecurity and defence.
A UK government spokesperson said its new AI economics institute was working with international partners to build ‘a stronger shared understanding of how AI is transforming economies around the world’. The spokesperson described it as ‘the first government-backed body of its kind focused on AI’s economic impact, helping policymakers understand what AI means for growth, productivity, jobs and public services as the technology develops at pace’.
Whether that domestic investment push can outpace the systemic risks Bailey is describing is a question now squarely on the table in Asheville, where G20 finance ministers and central bank governors are due to meet from 31 August.
