Bank of England Governor Andrew Bailey said the UK needs to be prepared for the possibility that artificial intelligence could trigger disruptions in financial markets, according to Sina Finance. He said the central bank is watching very closely the large amounts of money flowing into the AI sector.
Asked whether an AI bubble could burst, Bailey said asset prices could see some degree of correction at some point in the future. He also said the technology carries "huge potential to boost our economic growth," while also bringing significant risks, adding that policymakers need to understand both sides fully.
Bailey noted that the market is currently pricing companies as if each of them will be a winner, but said that not all of them will be. At the same time, he pointed to one major possible benefit of AI for central banking work: speeding up support provided to the Monetary Policy Committee. He said AI would not make decisions on behalf of policymakers, but could serve as a useful tool in their hands.
Bank of England Governor Andrew Bailey warned that artificial intelligence could trigger shocks in financial markets and said the UK needs to be prepared, according to Sina Finance.
Bailey said the Bank of England is watching "very closely" the large sums of money being poured into the AI sector. Asked whether he believes an AI bubble could burst, he said, "At some point in the future, asset prices may see some degree of correction."
He said the technology has "huge potential to boost our economic growth, but it also comes with significant risks, so we need to have a full grasp of both sides."
Bailey also said, "Right now, every company is being priced as a winner, but not everyone is a winner."
Still, he said one major potential benefit of AI is that it could "speed up the work that supports the Monetary Policy Committee." He added, "It will not make decisions for us. It is a tool in the hands of policymakers, and that is a good thing."
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