The Bank of England is exploring the implementation of an artificial intelligence (AI) “kill switch” as a safeguard to prevent automated trading systems from triggering widespread financial market disruptions. The central bank’s deputy governor, Sarah Breeden, outlined the concerns during a conference of central bankers in Sintra, Portugal, where she detailed ongoing research into how coordinated AI-driven trades might amplify market volatility under stress.
Breeden described how simulations are being conducted with Germany’s Bundesbank and the Bank for International Settlements to examine potential scenarios in which AI trading bots simultaneously execute similar transactions, potentially causing abrupt market swings. She noted that current regulatory frameworks, which are largely technology-agnostic, may need updating to address new risks posed by AI.
To mitigate these risks, the central banks are considering tools such as circuit breakers or kill switches designed to halt or limit market-wide trading activity if malfunctioning AI models contribute to instability. Circuit breakers are mechanisms already used on many stock exchanges to interrupt trading during periods of extreme price movements and panic selling.
The concern over AI’s evolving role in finance has intensified following Anthropic’s decision to withhold the release of its advanced chatbot system, Mythos, over fears it could be exploited for cyberattacks. UK banks have not yet been able to access this or similar emerging AI technologies due to restrictions imposed by the US government amid broader cybersecurity concerns.
Currently, most trading firms employ autonomous AI primarily for lower-risk functions such as data analysis and research. However, Breeden cautioned that AI’s role could expand rapidly, leading to unforeseen consequences for market stability. She pointed to the increasing use of algorithmic trading, which executes transactions at high speed in response to market fluctuations, making financial markets vulnerable to swift and synchronized activity.
The Bank of England has previously investigated the impact of algorithm-driven trading, notably examining a “flash crash” in the British pound in 2016, which was attributed to multiple algorithms executing trades during a normally quiet trading period.
The renewed focus on circuit breakers comes amid recent volatility in global markets. For example, South Korea’s Kospi index triggered its market-wide circuit breaker twice in one week during sharp trading fluctuations—a mechanism rarely activated in that market’s history.
Separately, Barclays has announced it will acquire a 999-year lease on its Canary Wharf headquarters, One Churchill Place, from Canary Wharf Group for £750 million. This transaction marks the largest recent office deal in the UK and signals renewed confidence in London’s Docklands financial district, which has faced challenges due to bank relocations and remote working trends in recent years. Barclays has occupied the site since 2005 and will now hold the freehold interest.
The Bank of England’s move to assess AI’s potential risks reflects broader regulatory efforts to adapt to rapid technological change within financial markets and reinforce safeguards against future systemic events.