Sarah Breeden, the Bank of England’s deputy governor for financial stability, warned that autonomous AI systems pose a growing threat to financial markets, cybersecurity and payment infrastructure, and urged central banks around the world to consider better regulations for the sector.
Speaking at the European Central Bank’s annual forum in Sintra, Portugal, Bredin explained that agentic AI is progressing faster than regulators expected. According to her observations, in 2019, the length of programming tasks that leading AI models can complete doubled every seven months. However, by 2024, doubling was occurring every four months.
Advances in vulnerability detection this spring suggest that this pace may have accelerated.
“We were surprised this spring, and we have to be prepared for more technological surprises,” Breeden said He said At the June 30 event.
From content creation to freelance work
Breeden emphasized three important stages of AI development, explaining that earlier this decade, generative AI systems produced content only when told to do so. By late 2024, the models were trained to reason through multi-step problems. Now, agent systems can plan and execute decision sequences on their own without any human supervision.
When applied to finance, this path points toward a system where AI agents can trade securities, process payments, and respond to cyber threats with limited human involvement. Breeden went on to describe a financial system that “operates more independently, at scale and speed,” with agents working on behalf of consumers, merchants, and trading platforms.
The Bank of England is most concerned about cyber risks
Among the many risks to financial stability, Breeden cited cybersecurity as the most important issue. She cited the UK government’s AI Security Institute, which has identified a significant improvement in what proxy AI can do online.
The same tools that help defenders find and patch vulnerabilities also give attackers the ability to discover and exploit them. Breeden warned that malicious use of these capabilities “significantly increases the chances of attacks that could harm financial stability.”
Breeden’s remarks included a suggestion that independent trading instruments may need built-in “kill switches” to prevent market shocks, which would represent a deviation from current regulations.
The investment boom raises enormous risks
Breeden mentioned another concern regarding the funding of these AI agents. The bank’s Financial Policy Committee concluded in April that while big technology companies initially financed the creation and maintenance of AI infrastructure from cash flow and equity, the use of debt financing was rapidly increasing and taking new and complex forms.
This means that a sudden decline in AI-related asset valuations could now cause a massive ripple through the credit markets. The Deputy Governor of the Bank of England said that the committee considered that “the financial stability consequences of any decline in asset prices linked to artificial intelligence could increase.”
A more in-depth assessment from the committee on this topic is expected on July 7.
Breeden also said that central banks need to adapt to use AI themselves in supervising these systems, and not just focus on managing the risks that AI introduces.
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