Abstract:
BoE Governor Andrew Bailey has joined those warning of the global risks posed by state-of-the-art artificial intelligence technology. Bailey currently serves as Chairman of the International Financial Stability Board. In a two-page letter sent to international finance ministers and central bank governors, he said "cutting-edge" artificial intelligence models are demonstrating "increasingly sophisticated autonomy and problem-solving capabilities, as well as the ability to launch threats."
He warned that these models could unravel the highly interconnected global financial system through cyber-disruption that "can spread across different jurisdictions."
Ahead of this week’s meeting of G20 finance ministers and central bank governors in North Carolina, USA, Bailey wrote to participants: “Recent developments have also brought to my attention that many jurisdictions have not yet established protocols to govern the development, release and deployment of advanced cutting-edge artificial intelligence models, exacerbating the risks faced by the financial sector and the wider field.”
In the past few weeks, many well-known technology experts have been sounding the alarm about the risks of artificial intelligence, and Bailey's letter further exacerbated related concerns. This also continues his previous stance of calling for international cooperation to jointly deal with the threat of artificial intelligence. He previously told City chiefs: "No country can insulate itself from the nature of the cross-border systems that prevail today."
Last month, 1,367 researchers and engineers from the Frontier Artificial Intelligence Laboratory jointly issued an open letter, most of them from OpenAI, Anthropic and Google DeepMind. The letter also reveals the concerns felt by engineers involved in developing this technology every day.
The open letter reads: "The development of artificial intelligence capabilities is likely to rapidly exceed our ability to understand or control the relevant systems." The letter then calls on the U.S. government to support "an international effort to develop the necessary technology and governance tools to consciously control the development rate of cutting-edge automated artificial intelligence."
It was also revealed earlier this month that OpenAI employees had observed signs of unusual behavior in its systems weeks before its cutting-edge artificial intelligence agents escaped their training environments, launched an unprecedented hacking campaign and sparked global panic.
Bailey extended this theme to the realm of financial policy. He continued: "For the financial system, the most immediate concern right now is the impact that cutting-edge artificial intelligence may have on cyber risks. Frontier artificial intelligence may be able to fundamentally change the speed, scale and economic cost of cyber risks, thereby eroding confidence in the entire market, especially when the financial system is highly dependent on a few large third-party service providers."
Bailey called on all parties responsible for maintaining the security of the global financial system to prioritize "taking appropriate measures globally to support the safe and responsible release and deployment of models."
The letter also addressed Bailey's concerns about the increased use of leverage in bond and stock markets. He said rising leverage was compounded by high valuations in concentrated financial markets, particularly driven up by investor optimism about the prospects for artificial intelligence. This situation may amplify future market corrections.
I therefore remain concerned that a major shock, or a combination of shocks, could trigger multiple vulnerabilities simultaneously," Bailey wrote.
Bailey has been governor of the Bank of England since March 2020 and previously led the Financial Conduct Authority and the Prudential Regulation Authority, the two main financial regulators in the UK. He was appointed chairman of the Financial Stability Board last year.
The Financial Stability Board, headquartered in Basel, Switzerland, is responsible for coordinating the work of various countries' financial regulatory agencies and international standard-setting bodies at the international level, aiming to formulate effective regulatory rules and policies to maintain financial stability.
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