Bank of England warns on AI, cyber and financial stability risks

The Bank of England has published its July 2026 Financial Stability Report, warning that AI-related valuations, leverage, private credit risks and frontier AI cyber threats are increasing financial stability risks.

• The report says vulnerabilities in risky asset valuations, sovereign debt markets, private credit, and equity leverage remain, while frontier AI is creating new cyber and operational resilience risks.
• It also announces proposed reforms to the UK capital framework, including making buffers more releasable and consulting on changes to the leverage ratio; the report references earlier announcements and ongoing consultations rather than a single new deal.
• The report includes a system-wide exploratory scenario on private markets, states the UK has the largest data center pipeline in Europe, and notes that AI data center build-out will require significant investment and financing.