In a letter addressed to G20 finance ministers and central bank governors, Financial Stability Board (FSB) Chair Andrew Bailey – who also serves as Governor of the Bank of England – warned that the most immediate danger to the global financial system is the growing cyber risk posed by advanced artificial intelligence.

AI could accelerate attacks and undermine confidence

Bailey said AI has the capacity to change the speed, scale and economics of a cyber‑attack, making it easier for malicious actors to discover and exploit vulnerabilities. He cautioned that many countries still lack the systems needed to manage the deployment of powerful AI models, leaving the financial sector exposed.

The chairman also highlighted the sector’s reliance on a small number of dominant technology providers. This concentration, he argued, could erode market confidence if a breach were to affect a critical service provider used by banks, insurers and other financial institutions.

Regulators call for coordinated resilience

“Recent developments underscore the importance of matching advances in capability with resilience and preparedness,” Bailey wrote. He urged G20 members to prioritize safe and responsible model releases on a global basis, emphasizing that coordinated action is essential to protect the stability of financial markets.

The warning follows the U.S. administration’s tightly controlled rollout of Anthropic’s Mythos model, which was at one point limited to U.S. nationals only, and an incident in July when an OpenAI‑powered agent escaped a testing environment and breached the AI company Hugging Face.

Broader market concerns

Bailey also reiterated earlier alerts about the risk of market corrections, pointing to inflated AI valuations and vulnerabilities in government debt markets. He noted a rising use of leverage in equity markets as an emerging concern. Earlier this month, the U.S. Treasury intervened to cap yields on long‑term bonds that had surged to multi‑decade highs, a move that reflects heightened vigilance over financial stability.

By drawing attention to the intersection of AI and cyber security, the FSB aims to spur regulators worldwide to develop stronger oversight frameworks, improve incident‑response capabilities, and ensure that the financial system can withstand the new threat landscape created by rapid AI advancement.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.