The Bank of England governor, Andrew Bailey, has called for society to keep control of increasingly autonomous artificial intelligence models, warning that the risks posed by cutting-edge “frontier” systems “are real and increasingly significant”.
Writing in an article published on the Bank’s website today, Bailey said the most advanced forms of the technology were improving themselves through so-called “recursive learning”. Without effective means of intervention, he said, “this process resembles a closed loop in which the model progressively governs itself”.
“A sufficiently powerful system functioning within a self-reinforcing loop risks reducing the ability of society to exercise meaningful oversight and intervention,” Bailey said.
“The greater the capability of the system, the more important this question becomes. That is why the issue has acquired such urgency.”
Bailey said that “a sensible starting point is rigorous model testing” to ensure that “intervention is both possible and effective”. In the article on the Bank of England website, he said such testing should take place before and after deployment, and that a more formal regulatory framework may emerge over time but was not, in his view, the right place to start.
His comments come as the number of incidents disclosed by AI laboratories in which their agents have acted in unexpected ways has increased. They include OpenAI’s recent admission that its agents had accessed some Australian government systems without authorisation.
Bailey said AI could bring “immense” potential benefits and might “contribute substantially to economic prosperity”.
He said, however, that there were also risks for central banks to guard against, including that frontier AI “materially increases the scale and sophistication of cyber threats facing the financial system”.
“The resilience of payments networks, financial market infrastructures, banks, and other critical institutions can no longer be considered separately from advances in artificial intelligence,” the governor said. “Central banks have a responsibility to safeguard the stability of the system as a whole. We cannot stand aside and assume that technological progress will resolve these questions on its own.
“The public interest requires that we engage with them now, before the risks become more difficult to contain. The challenge before us is therefore not whether to embrace artificial intelligence. It is how to ensure that, as these systems become more capable, society retains the capacity to govern them.”
Financial regulators have raised cyber risk before: the Financial Conduct Authority’s chief executive, Nikhil Rathi, said last year that the UK financial system was “not prepared” for rising cyber and geopolitical threats.
Financial Policy Committee record
Bailey’s intervention came as the Bank’s Financial Policy Committee separately said that risks to financial stability had worsened since the summer, citing a combination of potential threats that included AI and the renewal of conflict in the Middle East.
“The likelihood that interconnected vulnerabilities in the financial system crystallise has risen,” the committee said in its latest meeting record, published today.
As well as the cyber security threat posed by frontier models, the committee highlighted the pace of debt issuance to finance AI-related investment. By September that issuance had reached $450bn, according to the committee, more than the $330bn of gilts the UK is expected to sell this year.
“The increasing indebtedness of AI firms combined with opacity and, at times, ‘circular arrangements’ that can be associated with this financing, can complicate the assessment of risks and could amplify losses if expectations disappoint,” the committee said.
The Bank has previously warned that the AI investment boom was increasingly being financed by debt, with Bailey comparing technology valuations with the dotcom era.
The committee said the re-escalation of the war in the Gulf had pushed up oil and gas prices and caused “a more protracted negative supply shock to the global economy”.
“This has contributed to sustained increases in sovereign bond yields across a number of advanced economies, to levels not seen since 2008,” it said.
The committee concluded, however, that the financial system “has so far been resilient” in the face of the bond market turmoil.
