Bank of England Deputy Governor Warns of Accelerating AI Risks to Financial Stability

Sarah Breeden, Deputy Governor at the Bank of England, has highlighted the urgent need to address artificial intelligence risks to financial stability as the technology develops at an unprecedented pace.

Speaking at a recent event focused on AI and financial stability, Breeden emphasized that the rapid acceleration of AI capabilities presents both opportunities and challenges for the financial system. Central banks, including the Bank of England, have spent years working to encourage responsible AI adoption across finance, recognizing AI as a likely next general-purpose technology that could drive long-term economic growth.

The acceleration in AI development has created what Breeden described as a dual challenge: enabling responsible adoption while managing emerging risks, alongside reconsidering how central banks themselves should evolve their operations in response to the technology.

Rapid capability growth

The pace of AI advancement has intensified dramatically in recent years. In 2019, the complexity of software tasks that leading AI models could handle doubled approximately every seven months. By 2024, this timeline had compressed to around four months. Recent breakthroughs in spring models designed to identify cybersecurity vulnerabilities suggest the acceleration may have quickened further still.

Breeden cautioned that the financial sector should anticipate additional technology surprises as this exponential trajectory continues, and warned against allowing unexpected AI developments to test the resilience of financial stability frameworks.