Governor Andrew Bailey told the BBC that the Bank of England is scrutinising the surge of capital flowing into artificial-intelligence firms, warning that the scale of investment could generate financial-market shocks if expectations prove unrealistic. He said, quoting himself, that the central bank is watching the “huge amounts of money being invested in AI very carefully”, and stressed that not every participant will profit.
Bailey noted that the flood of funding has pushed the market value of some AI companies into the multi-trillion-dollar range, citing Nvidia as the world’s most valuable listed firm with a $5.5 trillion (£4.14 trillion) valuation. He added that Alphabet, Meta, Microsoft and Amazon are each committing hundreds of billions to AI, while Anthropic and OpenAI prepare US share sales that could inject further hundreds of billions into the sector.
The governor warned that the rapid rise in AI asset prices could later require a correction, saying “you could see some correction of asset prices at some point.” He reminded listeners that past technology booms have left early leaders behind, pointing to Netscape’s disappearance after Google overtook internet search, and emphasized that not every firm will emerge as a winner.
Bailey also highlighted security threats, warning that AI tools could be weaponised for cyber attacks by exposing hidden software vulnerabilities. He cited the proliferation of deepfakes as another danger, noting that fabricated images of himself and Nigel Farage fighting on the platform X had circulated, and that the Bank struggles to trace their origin without assistance from technology firms.
Despite the cautions, Bailey said AI offers tangible advantages for the Bank’s core functions, particularly by accelerating analytical work that supports the Monetary Policy Committee’s interest-rate decisions. He described the technology as a “tool in the hands of the policy maker,” stressing that it does not replace judgment but can improve the speed and depth of economic analysis.
Bailey’s warning arrived as government borrowing costs in the UK, United States, France and Japan reached multi-decadal highs, with 30-year UK gilt yields climbing above 6% and US 10-year Treasury yields touching 5.34%, their highest levels since the late 1990s and early 2000s. Central banks have been tightening rates to tame inflation, prompting investors to shift from bonds toward AI-driven growth opportunities.
The governor concluded that the financial system must remain resilient to any AI-related market turbulence, urging the technology sector to cooperate in tracing malicious content and strengthening cyber defences. He affirmed the Bank’s readiness to manage potential shocks while continuing to monitor the evolving AI landscape for both risks and opportunities.