Bank of England sees growing risk that dangers from AI and debt will materialise

The Bank of England on Wednesday warned of an increase in the risk that interconnected weaknesses in the financial system will crystallise, highlighting the re-escalation of the conflict in Iran and increased AI-related debt issuance.

Rises in oil and gas prices had led to bond yields increasing to levels not seen since 2008, the BoE’s Financial Policy Committee said.

While the financial system and equity markets had so far proved resilient, the FPC warned that the danger of a sharp adjustment persists. It maintained its Countercyclical Capital Buffer – a varying buffer against financial risks – at 2%.