The UK financial system is facing an increased risk from AI, the BoE has warned.
In its latest Financial Stability Report, the BoE said examples of threats posed by AI include a potential stock market bubble, heightened cybersecurity vulnerabilities and AI companies’ increasingly complex and opaque debt.
The Bank's Financial Policy Committee (FPC) also questioned the basis for the anticipated economic benefits of using AI, saying there is "uncertainty over the scale and timing of future productivity gains" and companies' ability to make money from AI.
It added that AI has the potential to increase productivity "across a range of sectors" however and support long-term economic growth and developments in AI have already supported growth in some regions.
In Q1 2026, the FPC assessed the risks to financial stability from the adoption of AI in the financial sector across four channels, building on the framework set out in its April 2025 Financial Stability in Focus, namely: (i) greater use in banks’ and insurers’ core financial decision-making; (ii) greater use in financial markets; (iii) operational risks in relation to AI service providers; and (iv) the changing external cyber threat environment.
