The Bank of England will now assess the risk AI poses to the stability of Britain’s financial system, as part of its stress tests.
In a letter to MPs, the Bank said that AI has ‘likely long-term implications’ for how the financial system serves the economy and is analysing investment and adoption in the industry.
It said it disagreed with the Treasury Committee’s assessment that it was taking a ‘wait and see’ approach to the potential risks of AI in the financial sector.
Deputy governor for financial stability, Sarah Breeden said the BoE was working with international counterparts and would undertake specific stress testing on ‘herding’ behaviour that could amplify market selloffs.
It follows the launch of Anthropic’s Mythos AI product, which experts warn poses unprecedented risk because of its ability to expose cybersecurity vulnerabilities. It plans to release the technology to UK financial firms over the next week.
Finance leaders have warned of the potential threat of the tool, and wider AI risks, at the International Monetary Fund’s summit in Washington this week.
BoE Governor Andrew Bailey said Anthropic may have ‘found a way to crack the whole cyber risk world open’. He added that the cyber risk posed by AI was one that ‘never goes away’ and has called for global regulators to evaluate the potential threat.
ECB President Christine Lagarde warned that if Anthropic’s tool ‘falls in the wrong hands, it could be really bad.’
The Treasury Committee also criticised the central bank for failing to commit to bringing AI and cloud companies into the Critical Third Parties regime – which regulates the suppliers of financial system infrastructure – before the end of the year.
‘I am pleased to see the Bank of England is grasping the nettle to some extent but I remain perplexed at the apparent inertia shown by the Treasury,’ said Dame Meg Hillier, chair of the Treasury Committee. ‘The disruption which could be caused to our financial services system by an outage at a major provider could be extremely damaging.’
She added: ‘The powers offered by the Critical Third Parties Regime are sitting unused while we remain vulnerable. I simply cannot understand why this is taking so long. We will continue to monitor this situation closely.’
Treasury minister Lucy Rigby told the committee that the Government expects to make initial CTP designations this year, but did not reveal which firms are under consideration.
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