Bank of England governor warns AI investment could cause market shocks

Bank of England Governor Andrew Bailey has warned that the huge investment flowing into artificial intelligence could trigger financial market shocks. Bailey told the BBC that the central bank was watching the sector carefully. He said asset prices could undergo a correction because investors were placing high expectations on companies developing AI.

The warning comes as Nvidia’s market valuation reached $5.5 trillion and major technology companies including Alphabet, Meta, Microsoft and Amazon committed hundreds of billions of dollars to the technology. Anthropic and OpenAI were also preparing possible stock-market listings, according to the supplied report. Bailey said AI had significant potential to strengthen economic growth, but cautioned that not every company or investor would succeed.

He compared the current enthusiasm with earlier technology markets in which early leaders did not necessarily remain dominant. He also highlighted risks from AI-enabled cyberattacks and deepfakes. The Bank had struggled to trace fake images showing Bailey and Nigel Farage in a fight, he said, adding that technology companies would need to help identify the source of manipulated material.

Bailey said AI could also support the Bank’s Monetary Policy Committee by speeding up work, although it would not make interest-rate decisions itself. He said financial institutions needed to ensure the wider system was resilient if market shocks emerged.