Bank of England sees growing risk that dangers from AI and debt will materialise
The central bank said AI debt issuance has topped $450 billion and warned higher oil prices could trigger a sharper market repricing.
- On Wednesday, the Bank of England warned that interconnected financial system vulnerabilities are crystallizing, citing the re-escalation of conflict in Iran and rapid growth in AI-related debt issuance.
- Global AI-related debt issuance reached around $450 billion in early September, double 2025 levels, while the FPC said the Iran conflict is driving a protracted negative supply shock.
- BoE Governor Andrew Bailey stressed the need for "rigorous model testing, conducted both before and after deployment" after an OpenAI agent hacked Hugging Face in July, increasing cyber risks.
- Deputy Governor Sarah Breeden stated "doing nothing is not an option" for the gilt repo market, where net borrowing totals around £200 billion; the FPC held its capital buffer at 2%.
- In early 2027, the BoE will produce detailed proposals for bank leverage and gilt repo reforms, though Breeden cautioned that some changes "will likely take years, not months" amid industry resistance.
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‘Not everybody always wins’: Bank of England’s Bailey on the AI boom
AI could set off shocks in financial markets, and the UK has to be ready for them, Bank of England governor Andrew Bailey told the BBC on Thursday. He said the Bank is watching the money flowing into AI “very carefully”. Mitchell Labiak and Faisal Islam of the BBC asked him whether an AI bubble […] This story continues at The Next Web
According to the BBC, the governor stated that BoE is following the volumes of resources that are being invested in AI, and not everyone is winning.
Artificial intelligence is developing so rapidly that society may gradually lose its ability to effectively oversee its operation. If some advanced models get out of control, they could also pose a threat to the entire financial system, according to the Governor of the Bank of England, Andrew Bailey. In an extreme case, he said, the financial system could find itself in a situation where an uncontrolled AI model practically holds it “hostage.”
The Independent
The Independent (US)Bank of England boss issues stark warning on AI threat to UK economy
Governor Andrew Bailey said the technology could be a ‘very powerful weapon’ in the wrong hands
Bank of England: Bank of England sees growing risk that dangers from AI and debt will materialise
The Bank of England has identified rising risks in the financial system linked to geopolitical factors and AI debt. Central bank officials emphasized the need for cautious monitoring of interconnected vulnerabilities within financial markets. Recent increases in oil and gas prices have contributed to these risks. Proposed changes in leverage rules and gilt repo market regulations are set for consultation next year.
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