Bank of England Tests AI Risks to UK Financial Stability

Artificial intelligence is spreading across banking, insurance and financial markets, raising concerns that common models, reliance on technology providers and automated trading could turn firm-level failures into system-wide shocks. The UK Parliament’s Treasury Committee urged the Bank of England to include AI-specific scenarios in its broader stress-testing framework, seeking better oversight of risks that conventional exercises may not fully capture.

Sarah Breeden, the Bank of England’s deputy governor for financial stability, said the central bank was analysing plausible macroeconomic and core-market outcomes arising from AI investment, development and adoption. Her response to the committee was published on April 16, 2026. The Bank is also incorporating AI scenarios into cyber and operational tests and working with international counterparts to simulate whether correlated behaviour, or “herding,” among AI trading agents could amplify financial-market stress.