Bank of England Governor Andrew Bailey said the surge in artificial‑intelligence investment could trigger financial‑market shocks and the UK must be ready for such events.

Bailey noted that huge sums have been poured into AI firms, inflating valuations to multi‑trillion‑dollar levels and creating the potential for a correction in asset prices.

He highlighted the risk that large bets on AI may not pay off, pointing to Nvidia’s $5.5 trillion market value as an example of inflated expectations.

Bailey also warned that AI could amplify cyber‑security threats, describing it as a “much more powerful way of uncovering vulnerabilities” that could be weaponised in the wrong hands.

The governor cited deep‑fake technology as another danger, recalling a June incident where fabricated images of him and Nigel Farage were spread on X, complicating source tracing.

Despite the risks, Bailey said AI offers benefits such as speeding up work that supports the Monetary Policy Committee, providing a tool for policymakers without replacing decision‑making.

He concluded that the Bank is preparing for possible market shocks and will work with the tech sector to ensure system resilience and traceability of AI‑generated content.