What is the warning sent to the G20 about?

A warning was issued that if growth in artificial intelligence slows sharply, it could turn into a correction in financial asset prices and spread worldwide. Bank of England Governor Andrew Bailey highlighted the risk to technology stocks and the financial system in an open letter sent to G20 finance ministers in the United States.

Factors that could deepen a market correction

According to Bailey, the impact of any shock could be magnified by high equity valuations, greater borrowing by investors and the concentration of capital in a small number of major technology companies. Cross-investments between AI companies and large cloud infrastructure providers could also make any correction more severe.

  • Persistently high market valuations
  • Rising leveraged borrowing by investors
  • Capital concentrated in a small number of major technology firms

Bailey wrote the letter in his role as chair of the Financial Stability Board (FSB), which monitors the global financial system. The assessment also pointed to volatility triggered by energy supply shocks caused by the US-Iran war, which was said to have increased existing vulnerabilities.

Why is cyber security risk coming into focus?

Bailey stressed that companies need to prepare for security breaches that could affect multiple firms at the same time. Earlier this month, 100 companies including Google, Microsoft, Anthropic and OpenAI also called on countries and international bodies to strengthen cyber defenses.

Concerns have recently grown that some tools announced by OpenAI, Anthropic and Meta can bypass protection systems used by banks and financial centers. The behavior of some AI agents mimicking real people to get past security barriers has intensified debate over operational risk in the financial sector.

Investment support continues in the UK

The warning came as the UK government was rolling out plans to expand domestic AI capacity. The government had announced a £100 million fund to support British AI start-ups and set a target to spur competition among companies developing solutions in areas such as healthcare waiting lists, cyber security and defense.

According to a government spokesman, the new AI economics institute is analyzing the impact of artificial intelligence on growth, productivity, employment and public services with international partners. The aim is to help policymakers build a shared and more robust framework for the economic consequences of fast-moving technology.