FSB Chair warns of risks arising from frontier Artificial Intelligence (AI) models

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• In his letter to G20 Finance Ministers and Central Bank Governors, FSB Chair, Andrew Bailey, warns of the risks posed by frontier AI models, highlighting in particular their potential impact on cyber risk.
• Mr Bailey calls on authorities to take appropriate steps to support safe and responsible model release and deployment, and for financial institutions to ensure robust response and recovery capabilities and resilience amongst critical third-party providers.
• The letter also notes concerns over the increased use of leverage in bond and equity markets, which is interacting with high valuations, market concentration and AI-related optimism in a way that could amplify a future market correction.

The Financial Stability Board (FSB) today published a letter from its Chair, Andrew Bailey, to G20 Finance Ministers and Central Bank Governors ahead of their meeting in Asheville, North Carolina.

Mr Bailey notes that the Middle East conflict has exacerbated energy-driven inflationary pressures. Markets remain vulnerable to a potentially disorderly correction that could spread across borders, particularly given fragilities in sovereign debt markets; vulnerabilities in private credit and stretched asset valuations (particularly AI-related investments). He warns that the recent increase in the use of leverage in equity markets is interacting with high valuations, market concentration and AI-related optimism in a way that could amplify a future market correction.