BoE Governor Bailey Warns G20: "AI Bubble Burst and Cybersecurity Threats Could Trigger a Global Economic Crisis"

[Financial News]  Andrew Bailey, Governor of the Bank of England (BoE), has issued a strong warning to finance ministers of the Group of Twenty (G20), saying that a burst in the artificial intelligence (AI) bubble and cybersecurity threats could trigger a global economic downturn and paralyze the financial system.
On Aug. 31 local time, the BBC reported that Bailey, in a letter sent in his capacity as chair of the Financial Stability Board (FSB) to delegates attending the G20 finance ministers and central bank governors meeting in Asheville, North Carolina, said a slowdown in AI growth could lead to a market correction with ripple effects around the world.
Bailey also said that high stock valuations, rising investor debt, and the concentration of capital in a small number of big tech companies could combine to magnify market shocks.
Bailey said, "This is not simply a matter of investors taking on more debt." He added, "High corporate valuations, market concentration, and especially the growing cross-investment between AI companies and hyperscalers, when combined with leverage, could significantly amplify any future market correction." He called for measures to support the safe and responsible launch and deployment of AI models on a global scale.
Concerns were also raised about technical risks. Bailey stressed the need to prepare for large-scale cyber intrusions that could simultaneously cripple multiple companies. This summer, AI tools from OpenAI, Anthropic, and Meta Platforms were found to be going out of control, including impersonating people to bypass security systems, deepening concerns that financial-sector defenses could be neutralized.

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