TECH

The flip side of AI: AI could threaten the global financial system by facilitating cyberattacks

AI-driven attacks have moved to the forefront of risks to the global financial system identified by the Financial Stability Board (FSB). Andrew Bailey, the board's chair and Governor of the Bank of England, believes that advanced artificial intelligence could significantly alter the speed, scale, and cost of cyberattacks.

This warning appears in a letter sent by the FSB to G20 finance ministers and central bank governors ahead of meetings scheduled for August 31 and September 1, 2026. The document lists cyber risk associated with so-called "frontier AI"—cutting-edge AI models—among the vulnerabilities with the potential to impact international financial stability.

AI could alter the scale of cyberattacks...For Bailey, the primary concern lies in the ability of the most advanced models to expand the operational capabilities of attackers. These systems exhibit increasing levels of autonomy, problem-solving skills, and other capabilities that can be exploited in malicious operations.

The technology can accelerate vulnerability identification, lower the cost of certain operations, and enable attacks on a scale difficult to achieve via conventional methods. The risk is heightened when the targets are financial institutions or technology providers serving multiple entities.

Reuters reports that Bailey identifies the impact of AI on cyber risk as the most immediate concern for the global financial system. He also warns of the lack of adequate mechanisms in many jurisdictions to manage the development, deployment, and use of the most advanced models.

However, the FSB acknowledges that artificial intelligence can also bolster defenses. These systems can assist in threat detection, vulnerability identification, and incident response. In the board's view, the evolution of AI capabilities must be matched by equivalent levels of preparedness and resilience. Technological concentration increases the financial sector's exposure... Another key point in the letter concerns the financial sector's reliance on a small number of technology providers.

Banks, insurers, payment companies, and other institutions rely on cloud services, digital platforms, and infrastructure provided by major technology companies. Consequently, a vulnerability at a shared provider could cause simultaneous disruptions across multiple organizations.

This concentration increases the likelihood of an incident escalating from an isolated issue into a systemic problem. The risk is compounded by the strong interconnections between markets and institutions across different countries.

*The Guardian* highlights this cross-border aspect of the warning. According to the publication, Bailey believes that the consequences of a cyber incident could spread through the infrastructure and providers shared by the international financial sector.

AI could amplify attacks...Bailey also highlighted the lack of protocols in various countries for monitoring the development, launch, and use of advanced artificial intelligence models.

Technological advances could accelerate the identification of system vulnerabilities, increasing the need for banks and other institutions to be able to fix flaws and restore services quickly.

Another area of ​​concern is the financial sector's reliance on a small number of major technology providers.

According to Bailey, this concentration means that a problem at a single company could affect multiple institutions and undermine investor confidence in the system as a whole.

Risk also exists in the markets...Beyond cyberattacks, Bailey warned that a financial market downturn could be amplified by investor enthusiasm for artificial intelligence.

The combination of these factors could magnify the impact of a potential market correction, especially if multiple issues arise simultaneously.

Bailey stated that governments and financial authorities must prioritize measures to ensure that advanced AI models are developed and deployed safely and responsibly on a global scale.

What is the FSB... The Financial Stability Board (FSB) is an international body that brings together financial authorities from various countries and seeks to identify and mitigate risks to the global financial system.

Bailey assumed the chairmanship of the body last year and has also served as Governor of the Bank of England since March 2020.

FSB calls for greater resilience...The FSB advocates for financial institutions and critical providers to strengthen their response and recovery mechanisms for serious incidents.

Preparedness involves testing continuity plans, identifying critical technology dependencies, and ensuring the capacity to restore systems and data following an attack. The letter even notes the need for organizations to be able to rebuild essential infrastructure from a clean slate should their systems become compromised.

The body also calls for measures to promote the responsible launch and use of advanced AI models on an international scale. Coordination between countries is particularly important in a sector where technology infrastructure, providers, and financial flows transcend borders.

The FSB's warning signals a shift in how regulators view the impact of artificial intelligence on cybersecurity. Concerns are no longer limited to the possibility of individual institutions facing increasingly sophisticated attacks. The focus has also shifted to the risk of a common vulnerability affecting multiple entities and causing disruptions that impact the stability of the financial system.

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