Bangkok is in the grip of monsoon season, with tropical heat and humidity making daily life distinctly uncomfortable.
Yet inside the cool, air-conditioned Queen Sirikit National Convention Centre, where the International Monetary Fund (IMF) is holding its annual summit, another source of discomfort is putting delegates on edge.
Officials and regulators have been warning me, one after another, that they are deeply alarmed by the all-powerful artificial intelligence tools being developed at extraordinary speed. Their fear is that these systems could ultimately trigger a crisis in the global financial system.
Britain once played an important part in the rise of AI, through companies such as DeepMind, which is now owned by Google. But the leading AI companies today are American or Chinese, leaving Britain increasingly sidelined.
At the same time, the UK economy is more exposed to the consequences of AI spiralling out of control than that of almost any other advanced nation.
Together, the City of London and Britain’s financial and professional services industries account for as much as 12 per cent of national wealth.
Any successful assault on those sectors would strike directly at the country’s economic resilience.
Imagine what hackers or cyber-criminals, armed with AI tools such as Anthropic’s unnervingly powerful Claude Mythos, could inflict on markets and systems in Canary Wharf
London is the world’s second most important financial centre, behind only Wall Street, and home to the planet’s largest foreign exchange markets. It also hosts a vast $4 trillion market in “complex interest rate derivatives”, as well as the payments infrastructure used by some of the world’s biggest banks. If even one of those networks were disabled by a rogue AI model—or by a system directed by malicious actors—the consequences could be catastrophic.
This is not a fanciful concern. In the past 12 months alone, major British brands including Jaguar Land Rover, Marks & Spencer and, most recently, online fashion retailer Asos have suffered serious damage.
Even more disturbing was this week’s extraordinary attack on several French supermarket chains, in which refrigerators reached temperatures of up to 50C (122F), causing millions of euros in damage.
Now consider what hackers or cyber-criminals equipped with AI systems such as Anthropic’s unnervingly powerful Claude Mythos might do to financial markets and infrastructure in Canary Wharf or the Square Mile—or to our bank accounts, pensions and other assets.
An attack on the payments system could leave ATMs offline, divert mortgage payments and other transfers, freeze credit cards, cancel salary payments and disrupt countless other everyday transactions.
If the clearing systems used by Britain’s High Street banks and building societies were brought down by a highly advanced, or even superintelligent, AI, millions of current and savings accounts could potentially be emptied within nanoseconds.
A strike against the London Stock Exchange could wipe out the value of shares held in personal savings and pension funds, sending markets into a devastating crash.
An AI-fuelled arms race is already gathering pace. Cybersecurity companies and other organisations are working to protect the infrastructure underpinning global finance. On the other side are rogue states such as North Korea and Iran, determined to create chaos, deepen division and steal whatever they can access.
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The IMF has warned that defending against these threats is becoming increasingly difficult because AI-enabled attacks can unfold almost instantaneously. In more than 70 per cent of reported cyber-attacks so far in 2026, the companies providing defensive software were unable to update their systems before hostile forces exploited their weaknesses.
In April, I spoke with Bank of England Governor Andrew Bailey in Washington DC. Even then, he warned me about the danger that increasingly powerful AI tools posed to financial stability. His concern was both palpable and prescient.
Six months later, many of the leading minds in global finance have joined him in scrutinising AI—not only for its money-making potential, but also for the risks built into the technology.
AI can undoubtedly deliver economic benefits. I have seen at close quarters how it has strengthened the economies of chip and hardware manufacturers across Asia.
But the speed of its development – which could soon become ‘recursive’, meaning the AI models improve themselves by continually refining their own computer code – is now regarded as the primary risk facing the international economy.
That is all worrying enough. But at the same time, this potentially disastrous technology is being built on sand: specifically the mountain of debt on which the industry’s mad rush for data centres and other commercial advantage is being built.
As the world’s second most important financial centre, challenged only by Wall Street, London hosts the biggest foreign exchange markets on the planet
A review by the IMF published this week is hugely critical of the ‘circular financing’ within the AI sector, in which the major players invest in each others’ companies and raise huge amounts of debt to do so.
The Fund’s regulators probed 14 major transactions agreed since 2023, involving $950billion of debt and share investment. It found them to be based on assumptions that revenues would eventually reach $1.4trillion – assumptions that are sketchy to say the least.
The truth is that the much-hyped prospects for AI have triggered a ‘gold rush’ into the biggest firms in the sector: the original ‘Magnificent Seven’ (Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia and Tesla) as well as newer AI champions such as Anthropic, OpenAI and Elon Musk’s SpaceX.
No one can be sure that the valuations that have driven these stocks to dizzy heights are justified. A future AI ‘correction’ – a polite word for a crash – could trigger a great debt-unravelling and a global recession that will make 2008 look like a teddy bears’ picnic.
This is one of the most pressing issues facing the West. So you might have expected it to be at the forefront of government thinking. Instead, Andy Burnham has seized the moment to try, of all things, to unpick Brexit.
True, Labour’s AI minister Kanishka Narayan warned this week that a breach of UK cyber defences by AI is ‘inevitable’. But the complacency among most of our political leadership when it comes to AI is chilling.
It is critical that the plumbing of the global financial system, which London has helped to shape since the City’s ‘Big Bang’ under Mrs Thatcher and her Chancellor Nigel Lawson, now be defended against attack.
Ordinary citizens should protect themselves too. One senior regulator admitted to me that he is now stashing banknotes at home, so that he and his family will have enough cash should Britain’s banking system be shut down.
Is he right to? It’s a question I shall be asking myself on my flight home after this deeply sobering conference in the Far East.