Artificial intelligence is becoming a growing concern for the global financial system, with the Financial Stability Board (FSB) warning that cyber risks linked to advanced AI models could pose the most immediate threat to financial stability.
FSB Chair Andrew Bailey, who also serves as Governor of the Bank of England, raised the concern in a letter to G20 finance ministers and central bank governors ahead of their meetings this week. He said the rapid development of advanced AI models could change the speed, scale and economics of cyberattacks, potentially making existing financial-sector defences less effective.
Regulators are increasingly focused on how advanced systems could make existing attacks faster, cheaper and easier to scale. Powerful models are becoming increasingly capable of autonomous problem-solving and identifying vulnerabilities. If attackers gain access to such capabilities, financial institutions could face a much shorter window to detect and respond to threats.
Bailey warned that many countries still do not have adequate systems for managing the deployment of increasingly powerful AI models. Financial institutions therefore need stronger response and recovery capabilities, particularly where critical operations depend on external technology providers.
Another vulnerability FSB highlights is the financial sector's growing dependence on a relatively small number of technology companies. Banks, payment companies and other financial institutions increasingly depend on common cloud, software and digital infrastructure providers. A major disruption at a single provider could therefore affect multiple institutions at the same time.
This concentration could undermine market confidence if financial firms cannot maintain essential services or recover quickly from a cyber incident.
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Cybersecurity is not the only AI-related issue on the FSB's radar. Bailey also pointed to high valuations of AI-related investments, market concentration and increasing leverage in equity markets as factors that could amplify a future market correction.
The warning came alongside other vulnerabilities in the global financial system, including fragile sovereign debt markets, private-credit risks and higher energy-driven inflation pressures.