'Not everyone can be a winner': Bank of England governor warns of AI investment shock

Bank of England Governor Andrew Bailey has warned that financial markets must brace for shocks that could be triggered when the AI boom gives way to a correction.

Speaking to the BBC on Thursday (local time), Bailey said the central bank is watching "very carefully" as money pours into AI and asset prices surge. "Prices are reflecting the idea that everyone will be a winner, but history tells us that not everyone will be," he said.

Bailey said the Bank of England is prepared to respond to market shocks and will ensure the financial system remains resilient if one occurs.

Asked directly whether the AI bubble would burst, Bailey said "there will be a correction in asset prices at some point." He added that AI holds "enormous potential to grow the UK economy, but we also need to be fully prepared for the risks."

Bailey said that in a systemic risk survey released Wednesday, the share of respondents citing AI as a risk had reached a record high. He also flagged AI's vulnerabilities, warning that "in the wrong hands, AI could potentially become a very powerful weapon."