Bank of England warns of AI debt and market shocks
The Bank of England (BoE) is sounding the alarm on growing risks in the financial system, pointing to global conflicts and a surge in debt tied to artificial intelligence (AI).
With oil and gas prices climbing and bond yields hitting highs not seen since 2008, the BoE says markets could face sudden shocks, even though things seem steady for now.
Bank of England keeps 2% buffer
To keep things stable, the BoE is holding its financial safety buffer at 2%. It has also noticed that AI-related debt issuance has shot up to $450 billion worldwide, which could be risky if things go south.
Governor Andrew Bailey says it's crucial to test AI models thoroughly as new rules are on the way.
The bank plans to produce more detailed proposals in early 2027, aiming to make sure future disruptions don't catch anyone off guard.