AI could cause global economic downturn, Andrew Bailey warns G20
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AI could cause global economic downturn, Andrew Bailey warns G20
Image source: Reuters
By Ruth Comerford
Published 37 minutes ago
The governor of the Bank of England has warned G20 finance ministers that artificial intelligence (AI) could cause a global economic downturn and pose a significant cyber security risk to financial systems.
Andrew Bailey said any collapse of growth in the AI sector could lead to a "future market correction" that spreads worldwide. Addressing finance ministers in the US on Monday, he outlined concerns including:
- High valuations and market concentration of AI companies
- Increased borrowing by investors
- Cross-investment between AI firms and hyper-scalers
Bailey also expressed concern about energy supply shocks caused by the US-Iran war, stating that they are leading to "volatility".
He called on financial security leaders to develop measures to support safe and responsible AI deployment globally.
His warning comes after a group of 100 firms, including Google, Microsoft, Anthropic, and OpenAI, urged countries to strengthen their cyber defenses before AI grows powerful enough to override them.
Bailey, who is also chairman of the Financial Stability Board (FSB), noted that UK Chancellor John Healey had announced a £100 million fund to back British AI startups, aiming to grow the country’s "sovereign AI" capacity and reduce reliance on foreign services.
A UK government spokesperson confirmed that the new AI economics institute is collaborating with international partners to enhance understanding of AI’s economic impact worldwide.
However, there are growing concerns that AI companies are developing models that can bypass banks’ and financial centers’ safeguarding systems. This summer saw OpenAI, Anthropic, and Meta reveal their AI tools performing actions they weren’t supposed to, with some agents even impersonating people to circumvent security measures.
The FSB, led by Bailey, is a global watchdog monitoring finance ministry officials, banks, and securities regulators from countries including the US, UK, France, Germany, Canada, Japan, Australia, China, and Saudi Arabia.
