G20 finance ministers are being urged to prepare for “more severe scenarios involving simultaneous disruption across multiple firms or shared technology dependencies”.
As we have been warning for several years now, our growing dependence on digital payments systems has created serious operational risks and vulnerabilities in the financial system. Digital payment networks depend on power grids, telecoms infrastructure, cloud servers, and complex software, and are inherently vulnerable to cyberattacks, software glitches and rolling blackouts.
Readers may recall the stark warning issued in March last year by Riksbank, the central bank of Sweden, one of the world’s most cashless economies. In its 2025 Payments Report, the central bank warned that the rampant digitalisation of payments over the past two decades, which it itself had spearheaded, had increased the vulnerability of Sweden’s financial system:
In 2024, the payments system has experienced few disruptions, but individual agents have been subject to attacks and have experienced disruptions. This is also confirmed by Finance Sweden, which states that recent cyber attacks have increased in strength and scope. The risk of new cyber attacks is significant, and is amplified by the heightened geopolitical risks.
The central bank even cautioned of the need to bolster Sweden’s cash infrastructure after years of neglect: “Measures need to be taken to strengthen preparedness and reduce exclusion so that everyone can pay, even in the event of crisis or war.” For years, it said, efficiency had been the priority for payments, but now safety and accessibility “are at least as important”.
Within weeks of the report’s publication, Spain suffered a massive energy outage that brought down electricity across nearly the entire Iberian Peninsula for hours on end — in some places for almost an entire day. As the system came back online and attention turned to the possible causes of one of Western Europe’s largest peacetime blackouts, one thing was clear: without cash, the resulting chaos would have been far worse.
Roughly half a year later, in November 2025, the Internet infrastructure provider Cloudflare suffered an outage that brought down roughly 20% of the Internet’s websites, including social media networks and online banking platforms, for over three hours. Weeks later, a similar glitch at the same company triggered a fresh wave of chaos.
Fast forward to today, we may have something potentially even more serious to worry about: AI cyber attacks, which now (apparently) pose an imminent threat to the global financial system — just three years after AI went mainstream. That’s according to Andrew Bailey, the governor of the Bank of England and current chair of the Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system.
It was in the latter role that Bailey wrote a letter this past weekend to G20 finance ministers and central bank governors warning of the need to prepare for “more severe scenarios involving simultaneous disruption across multiple firms or shared technology dependencies”.
The head of the world’s financial stability watchdog warned of the serious risk posed by advanced AI models to the global financial system.
In a letter to finance ministers and central bank governors for G20 countries, Andrew Bailey, chair of the Financial Stability Board, said… pic.twitter.com/5qd8yZ0IXu
— CNN (@CNN) August 31, 2026
From the Financial Times:
The letter from the Bank of England governor, who also chairs the Financial Stability Board, underlines how the guardians of the world’s financial system are becoming increasingly alarmed about the dangers of AI-enabled cyber attacks.
These fears intensified following a series of recent incidents in which the flagship models being tested by Anthropic and OpenAI went rogue, hacking into external organisations and creating fake identities to deceive people who were running the tests.
Bailey said in his letter, published on Monday, that AI cyber risks were adding to existing vulnerabilities in the financial system, including energy-driven inflationary pressures, rising interest rates, increased investor leverage and stretched equity valuations.
Urging more countries to take “appropriate steps” to control the release of new frontier AI models, Bailey appeared to be trying to convince the US to reconsider its hands-off approach to regulating the new technology.
“Recent developments have also highlighted to me that many jurisdictions do not have the protocols in place to manage the development, release and deployment of advanced frontier AI models, heightening risks for the financial sector and beyond,” he wrote.
Those “recent developments” include OpenAI’s recent decision to pause some of its model training after its models allegedly independently gained access to the internet during testing and hacked into the systems of tech company Hugging Face. Anthropic also reported cases in which Claude agents targeted real-world systems that were not included in the experiments.
The Financial Stability Board is not alone in warning of the risks posed by AI cyber attacks. In fact, there has been a cacophony of warnings in recent weeks. Just last week, more than 100 tech-related firms — including Google, IBM, Microsoft, OpenAI, Anthropic, Accenture and Cloudflare — co-signed a letter calling for “collective action” against “AI-enabled cyber attacks”.
The letter urges all organisations to make cyber defence an “immediate leadership priority” as more capable AI models make attacks easier to automate. It also calls on governments to give hospitals, water utilities, and local governments access to capable defensive AI, as well as to “impose costs” on attackers. As WIRED magazine notes, good luck with that.
It’s also noteworthy that the main solution being offered for all the security risks posed by AI involves granting organisations more access to “defensive” AI. So, whatever happens, more AI, which means more bank for the tech giants.
Interestingly, Israel, one of the world’s leaders in cyber security, is also “racing to harden critical infrastructure as AI cyber threats accelerate”, according to Ynet News:
The prolonged war and surge in cyberattacks against Israel have forced some of the country’s most sensitive organizations to reassess their computing infrastructure. Institutions that once viewed cloud computing with caution, and sometimes outright suspicion, are now facing a different question: not only how to protect data, but how to keep operating when the systems themselves become targets.
This is no longer theoretical.
Alongside ransomware, data theft and espionage attempts, Israeli organizations have in recent years faced operations linked to state actors and other well-resourced groups. AI could now allow attackers to work faster, at lower cost and at far greater scale.
AI has changed the equation
The warning follows a series of incidents that have shown how quickly the boundary between AI as an assistant and AI as a system capable of independently carrying out parts of an attack is beginning to blur.
One of the first people to raise the alarm was Bill Gates, which should in itself set off its own set of alarms. According to a fluff piece in the New York Times last week, Gates “is loudly warning that artificial intelligence poses a grave threat to jobs and human life, and that urgently addressing the risks should be ‘the world’s top priority.’”
This represents a neck-breaking U-turn from Gates. Only a year and a half ago, he was telling Jimmy Fallon that “in ten years’ time, most human tasks will be able to be performed by artificial intelligence.” Far from seeing that as a threat, Gates lauded AI as the most powerful lever to reduce inequalities and accelerate global progress — apparently by destroying untold millions of good-paying jobs.
Today, the Microsoft founder, after apparently emerging from an “extended period of scandal” over his ties to disgraced financier-cum-serial sex trafficker Jeffrey Epstein, is warning that the tech industry is downplaying the threats posed by AI:
“In private, people who understand how good this stuff is, and how much better it’s getting, they’re very worried,” he said. But few tech executives, Mr. Gates said, are willing to publicly admit that. “They’re now saying to each other: ‘Hey, man, don’t say that. It’s bad for us — the next trillion dollars we’re trying to raise.’”
On Wednesday, Mr. Gates published a nearly 6,000-word essay on his personal website laying out his concerns about A.I. and offering solutions, such as new taxes and bans. He said he was motivated to speak now because recent improvements in A.I. had far surpassed his expectations and because the industry had ignored technology milestones — like A.I.’s escaping the control of its creators or making recipes for bioweapons — that it once said would warrant more caution.
Of course, Gates has a long history of promoting controversial technologies that end up doing immense harm while making enormous sums of money for their investors, which often include Gates’ own charitable foundation. A case in point is his vision for global agriculture, which was nicely summed up by long-time NC reader Henry Moon Pie in a previous comments thread:
Gates is another billionaire madman with a particular hatred for Nature. His vision for global agriculture is GMO seeds, heavily doused with chemical fertilizers and pesticides, planted in vast monocrop fields, tended by robot tractors, and pollinated by robot bees (since his pesticides would kill all the real bees). All aspects of the operation will be under Gates’s IP “protection” from the seeds to the bees.
This vision, pushed by Monsanto in India in the 1960s and ’70s, has already failed once. … Humanity and the Earth can no longer afford billionaires.
When it comes to AI, the harms — economic, social, developmental, environmental, civilisational — could be on an even greater scale. In his letter to G20 finance ministers and central bankers, Andrew Bailey warned not only of the security risks posed by AI-enabled cyber attacks but also the economic risks posed by a collapsing AI bubble. From the Daily Telegraph:
In a letter to G20 finance ministers, Mr Bailey raised concerns over the economic fallout if the debt-fuelled AI investment boom begins to unravel.
He warned that the soaring levels of debt that have been used to fund AI “could amplify a future market correction”.
If the valuation of AI companies starts to plummet, then investors face the prospect of losing trillions of dollars overnight. This could trigger a dangerous chain reaction if they are then forced to sell other assets.
Mr Bailey said the risk was compounded by investors borrowing huge sums to invest in a small number of AI companies and data centre providers, pushing up their valuations to astronomical levels.
The fact that tech giants and central bankers are both warning about the growing risks posed by AI at exactly the same time are reason for pause — especially given the multitude of other pressures growing under the surface of the global economy (the prospect of soaring energy, fertiliser and food costs, Japan’s bond and yen woes, signs of economic slowdown in China, the ever-looming spectre of stagflation…).
A few weeks ago, my former WOLF STREET colleague, Wolf Richter, reported in an article cross-posted here that the Federal Reserve Open Market Committee had mentioned AI almost three times as much in its last meeting as it had in the previous one. As Yves noted in the pre-amble, “it is not at all like the Fed, or central banks generally, to think much about possible asset bubbles, since they look like an increase in wealth to investors and bystanders until they don’t.”
Look, our retirement savings are financing a sci-fi scenario of AI destroying civilisation before their data centers destroy the planet!
We’re talking cyber attacks on bank/payment systems plausible scenarios. https://t.co/oYGQWLHuGY
— Daniela Gabor (@DanielaGabor) August 30, 2026
The data centres not only threaten to wreak unprecedented environmental damage or facilitate cyber attacks on the financial system, as Daniela Gabor notes; they are also the backbone of the digital surveillance state that is quickly taking shape around us, allowing vast amounts of personal data to be collected, stored, and analysed by AI systems at unprecedented scale.
That said, not everyone is convinced by the sudden cacophony of dire warnings about AI models threatening global financial stability…
Scapegoat incoming👇…the system itself is inherently unstable.
Bank of England chief warns new AI models threaten global financial stability https://t.co/jkuXssE3CO
— Edward Dowd (@DowdEdward) August 31, 2026
Lastly, a little treat for the more conspiratorial minded. In the clip below, the investigate journalist Whitney Webb posits three reasons why a cyberattack targeting the financial system might hold a certain appeal to our technocratic overlords: it would allow the banks to absolve themselves of any role in the ensuing financial crisis; it would facilitate the final culling of all banks not deemed “too big to fail”; and it could serve as a launch pad for “onboarding people on to the new digital currency paradigm”.
Listen very attentively. Your bank account balance is a promise they never intended to keep. When the engineered crash arrives, the numbers will blink to zero and your calm will shatter. If you still trust the bank with your cash, you haven’t learned anything from previous cycles pic.twitter.com/cbx9ZVhrKn
— Catherine Austin Fitts (@austin_fit76995) August 31, 2026
Talk about killing three birds with one stone!
By
