Bank of England Governor warns of 'AI Black Swan': Cutting-edge models may amplify the risk of financial crises.

Beating AI Express: Andrew Bailey, Governor of the Bank of England and Chair of the Financial Stability Board (FSB), warned G20 finance ministers and central bank governors that cybersecurity risks from frontier AI models could resonate with existing vulnerabilities including high inflation, elevated interest rates, and financial market leverage, further raising the risk of severe shocks to the global financial system. Bailey noted that if multiple financial institutions or shared technology providers suffer simultaneous systemic disruptions, the existing financial defense framework could face severe strain. Meanwhile, AI-powered cyberattacks, deepfake identity deception, and other capabilities are rapidly expanding, while some countries have yet to establish mature regulatory frameworks for the development, release, and deployment of frontier AI models. Bailey also cautioned that high valuations fueled by the AI boom, debt pressures in sovereign and private credit sectors, and accumulated market leverage could all act as potential triggers for "disorderly adjustments" in financial markets. He recommended that financial institutions deploy "bare-metal" backup systems physically isolated from their main networks to improve recovery capabilities following catastrophic cyberattacks.