AI is a threat to the stability of the global financial system, says BoE chief Andrew Bailey

Ah, marvellous. Andrew Bailey, the Bank of England Governor who spent the 2022 gilt crisis telling everyone to remain calm while the markets quietly liquefied, has written a letter — published Monday, because of course it was — declaring that AI is a threat to the stability of the global financial system. Frontier models, he says, are raising the threat level for a disruptive cyber attack. Quite what the Bank of England intends to do about this remains, as ever, a state secret. One does not need a frontier model to predict how this ends.

Let us savour the inventory of horrors: stretched valuations, rising leverage, cyber concentration, and — my personal favourite — missing release protocols. The central bank of the United Kingdom has discovered that nobody appears to have written down who is allowed to press the 'deploy' button on a frontier model. This is rather like the fire brigade announcing, after the fourth arson attack, that somebody had left the petrol can out. Stretched valuations and rising leverage are presumably included to give his letter a comforting whiff of 2008, allowing the Governor to ignore the new thing while worrying about the old.

So the Governor writes, the watchdog counts, and the release protocols remain missing. If a disruptive cyber attack ever lands, we can at least console ourselves that it won't be a disorderly surprise: Andrew Bailey will have seen it coming in a letter published Monday, to which the appropriate response will be a strongly worded follow-up. Still, one must take comfort where one can. Cheers.