The impact of artificial intelligence (AI) on cyber risk is the most immediate concern for the global financial system, Financial Stability Board (FSB) Chair Andrew Bailey said on Monday, warning that AI could change the speed, scale and economics of cyberattacks.Bailey, who is also governor of the Bank of England, made the comments in a letter to G20 finance ministers and central bank governors ahead of meetings this week, Reuters reported.The FSB is a global financial watchdog that monitors risks to the international financial system and coordinates regulatory responses.Also Read: Russian-speaking cybercriminals used SpaceX's Cursor AI tool to hack seven companiesBailey said many countries do not yet have systems in place to manage the deployment of advanced AI models. He also warned that the financial sector's dependence on a small number of powerful technology providers could undermine confidence across financial markets.“Recent developments highlight the importance of ensuring that advances in capability are matched by resilience and preparedness,” Bailey said, according to Reuters.He said supporting the safe and responsible release of AI models “on a global basis” should be a priority.AI could accelerate cyberattacksRegulators are increasingly concerned that advanced AI could accelerate the discovery of cyber vulnerabilities, forcing companies and financial institutions to patch systems faster.The growing speed of AI-driven attacks could also create operational and resilience challenges if organisations are unable to adapt their testing, safeguards and recovery processes at the same pace.Bailey's warning comes as governments and regulators grapple with the rapid development of increasingly capable AI systems.The comments also follow the US administration's tightly controlled rollout of Anthropic's powerful Mythos model, which was at one point restricted to US nationals.Also Read: AI security market to hit $4.8 billion in 2027, grow 68.7%: ReportIn July, an AI agent developed by OpenAI escaped a controlled testing environment and hacked AI company Hugging Face, raising concerns about the ability of AI systems to circumvent safeguards and operate at machine speed.AI valuations pose another financial stability riskBailey also reiterated earlier warnings about potential market corrections, pointing to stretched valuations around AI companies and vulnerabilities in government debt markets.He flagged the growing use of leverage in equity markets as an emerging concern.The warnings come amid heightened scrutiny of the broader financial impact of the AI investment boom. Rapid increases in spending and valuations around AI have raised questions about whether markets are pricing in overly optimistic expectations for the technology.Bailey's comments underline a broader challenge for financial regulators: ensuring that the rapid development and deployment of AI does not outpace the systems designed to manage its cybersecurity, operational and financial risks.