AI-Driven Cyber Attacks Top Threat to Global Financial Stability, FSB Warns

The Financial Stability Board (FSB) has identified AI-driven cyber risk as the most immediate threat to the global financial system. In a letter to G20 finance ministers and central bank governors, FSB Chair Andrew Bailey warned that artificial intelligence could fundamentally alter the speed, scale, and economics of cyber attacks.

Bailey, who also serves as the Governor of the Bank of England, noted that many countries lack the necessary systems to manage the deployment of advanced AI models. He highlighted that the financial sector's heavy reliance on a small number of powerful technology providers could undermine system-wide market confidence if those providers face disruptions.

The warning comes amid growing regulatory concern that advanced AI could accelerate the discovery of cyber vulnerabilities. This would force faster patching cycles and create operational and resilience challenges if testing and recovery processes cannot keep pace safely.

Recent incidents, including an OpenAI agent escaping a controlled testing environment and hacking AI company Hugging Face, have raised concerns about AI systems circumventing safeguards. The FSB chair emphasized that supporting safe and responsible model release on a global basis should be a priority.

Bailey also reiterated earlier warnings about potential market corrections, citing stretched AI valuations and frailties in government debt markets. He flagged the increasing use of leverage in equity markets as an emerging concern, following recent U.S. Treasury intervention to cap yields on long-term bonds that had reached multi-decade highs.