“For the financial system, the most immediate concern is the potential impact of frontier AI on cyber risk,” Bailey wrote, adding that the technology may have the ability to materially alter the speed, scale, and economics of cyber risk.
Bailey, who also serves as governor of the Bank of England, according to Reuters, wrote that the financial sector’s reliance on a small number of concentrated third-party technology providers could undermine market confidence system-wide.
Many jurisdictions do not have the protocols in place to manage the development, release, and deployment of advanced frontier AI models, he wrote, calling support for “safe and responsible model release” on a global basis a priority for financial stability and economic growth.
Firms and authorities should prepare for a threat environment marked by a higher volume of vulnerabilities and a faster pace of patching, the letter said, cautioning that these dynamics could themselves create operational and resilience challenges if testing and recovery processes cannot adapt safely.
“Recent developments highlight the importance of ensuring that advances in capability are matched by resilience and preparedness,” Bailey wrote.