BoE’s Bailey warns G20 of “disorderly” market correction amid AI-fuelled valuations
Bank of England Governor Andrew Bailey has warned his G20 counterparts that soaring asset prices, particularly in AI-linked tech stocks, may be out of step with a fragile global outlook, leaving markets vulnerable to a sharp reversal.
In a letter sent in his capacity as chair of the Financial Stability Board (FSB), Bailey cautioned that recent rebounds across financial markets have produced valuations that «could now be at odds with the uncertain economic and geopolitical outlook,» heightening the risk of a «disorderly adjustment.»
The alert follows the BoE’s own assessment that stock market valuations look «stretched,» with concerns extending to the $3 trillion private credit market, which has grown rapidly as non-bank lenders compete with regulated banks.
Bailey said risks remain «elevated» amid geopolitical tensions, trade fragmentation and rising sovereign debt burdens, adding that vulnerabilities across the financial system «remain high.»
He urged regulators and central banks not to «lose sight of emerging risks,» promising stronger market surveillance. Areas of focus include the expansion of private finance, geopolitical spillovers and the increasing role of stablecoins in payments and settlement.
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