We need ‘right to intervene’ in AI amid growing threat, says Bank of England boss

The governor of the Bank of England has called for the “right to intervene” in the AI industry amid growing fears that rogue models could take the financial system hostage.

Andrew Bailey said the risks posed by frontier AI models – a number of which have gone rogue in recent months – were “real and increasingly significant”. Meanwhile, it was becoming harder for the public to have proper oversight of powerful AI models that were “functioning within a self-reinforcing loop”.

That is putting financial stability at risk, with the new technology having increased the “scale and sophistication of cyber threats to the financial system”, he said. The governor warned it could threaten daily card payments, bank transactions, and stock and bond trading across financial markets.

Andrew Bailey said the risks posed by the rapid advancement of frontier AI models were ‘real and increasingly significant’. Photograph: Sarah Lee/The Guardian

The comments came as the Bank’s financial policy committee (FPC) said the growing mountain of AI debt was increasing financial stability risks.

The potential benefits of AI “are immense”, Bailey said but he added that authorities needed to be ready to step in.

In an opinion piece penned for the Bank of England’s Insight series, he said: “If we are to realise those benefits safely, we must answer one critical question. Should society retain the ability to intervene, to establish the boundaries within which these systems operate and to revise those boundaries as the technology evolves? To my mind, the answer is unequivocally yes.”

But Bailey said authorities needed to figure out why they might be forced to step in. He said a “sensible starting point” would be rigorous testing of new AI models to understand how they behave and identify “credible points” where authorities could intervene.

“In time, that understanding could be codified into a set of standards which will help to ensure consistency in approach across the financial system, and perhaps more broadly across the economy,” he said.

However, the governor stopped short of calling for a regulatory clampdown, saying it was “not, in my view, the right place to start. In the excitement surrounding AI development, there is a risk that we move too quickly to debates about regulatory architecture before establishing where the failure exists in the first place.”

A growing number of lawmakers, AI researchers and even some AI companies have called for more government oversight of artificial intelligence in recent weeks. However, hopes for international cooperation faded after Donald Trump broadly rejected calls for more regulation of AI technology – most of which is being developed in the US – warning it could hurt efforts to compete with China and threaten economic growth.

But Bailey said a set of standards could help safeguard the financial system from harmful AI, which may end up operating outside well-established “shared norms, obligations and responsibilities”.

“Central banks have a responsibility to safeguard the stability of the system as a whole,” Bailey said. “We cannot stand aside and assume that technological progress will resolve these questions on its own. The public interest requires that we engage with them now, before the risks become more difficult to contain.”

Warning of the ballooning AI debt pile, the FPC said large players in the sector had taken on $450bn (£339bn) worth of debt between January and September this year, already overtaking the $333bn worth of gilts due to be issued by the UK government for the whole of 2026.

That has tied investors – including hedge funds, asset managers and private credit firms – to the fortunes of AI companies at a time when those tech businesses have yet to turn a profit.

“The rapid increase in artificial intelligence-related debt issuance broadens the exposure of capital markets to development in AI,” minutes of the recent FPC meeting on 25 September said.

“The committee underscores the importance of timely and careful management of these intensifying, interconnected risks.”

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