Here in Bangkok it’s monsoon season, and the tropical heat and humidity are making for uncomfortable conditions.
But within the safely air-conditioned Queen Sirikit National Convention Centre, at the annual summit of the International Monetary Fund (IMF), something else is making attendees hot under the collar.
Officials and regulators have been telling me one after another how terrified they are of the all-powerful AI tools being built at breakneck speed – and which could presage the meltdown of the global financial system.
Britain may have once played a key role in the development of AI – through companies such as DeepMind, now owned by Google. But today the major AI players are all American or Chinese – while we have been pushed to the sidelines.
Meanwhile, our economy is more vulnerable to this technology spiralling out of control than that of almost any other advanced nation.
Together, the City of London and our financial and professional services sectors generate up to 12 per cent of national wealth.
Any attack on them would be a direct attack on our 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
As the world’s second most important financial centre, challenged only by Wall Street, London hosts the biggest foreign exchange markets on the planet. It is home to a vast $4trillion market in ‘complex interest rate derivatives’, and is the centre of a payments system for some of the world’s biggest banks – and much more. If even one of these networks were to be shut down by a rogue AI model, or one instructed by bad actors, it could cause havoc.
This is not an idle fear. In the past 12 months alone we have seen terrible damage wrought on large British brands from Jaguar Land Rover to Marks & Spencer and most recently online fashion giant Asos.
More frightening still is this week’s bizarre hacking of several French supermarket chains, which saw refrigerators heat up to as much as 50C (122F) causing millions of euros worth of damage.
Imagine then 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, the Square Mile or on your and my personal bank accounts, pensions and other assets.
If the payments system were attacked, ATMs could stop working, money transfers including mortgage payments be diverted, credit cards frozen, salary payments cancelled and much else.
If the clearing systems used by all our High Street banks and building societies were disabled by a highly sophisticated – let alone superintelligent – AI, then millions of current and savings accounts could be drained in nanoseconds.
Were the London Stock Exchange to be targeted, then personal savings or pension funds’ investments in stocks could be wiped out, causing the market to crash.
An arms race is accelerating. Cyber-security firms and others are trying to safeguard the machinery of the global financial system – while, on the other side, rogue states such as North Korea and Iran are hell-bent on causing chaos and division and stealing anything they can get their hands on.
As the IMF warns, the world’s ability to combat such threats is becoming ever more difficult because of the near-instantaneous nature of attacks enabled by AI. In more than 70 per cent of reported cyber-attacks so far in 2026, the providers of the software designed to repel them were unable to update their systems before the inadequacies were exploited by hostile forces.
Back in April, I spoke to the Governor of the Bank of England, Andrew Bailey, in Washington DC. He alerted me even then to the dangers that powerful new AI tools represented to the financial system. His anxiety was palpable and prescient.
Six months on, many of the finest minds in global finance have now joined him in focusing on AI – both its potential for money-making and its inherent risks.
Yes, AI can be a force for economic good: I have followed closely how it has bolstered the economies of chip and hardware manufacturers in 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.