Bank of England's Bailey: Test First, Regulate AI Later

Bank of England Governor Andrew Bailey has said regulating artificial intelligence "is not the right place to start," arguing instead for "rigorous" testing to find vulnerabilities and safeguards to contain risk before any formal framework takes shape.

Writing his first-ever article for Substack, Bailey said the risks around AI were "real and increasingly significant." He did not call for the technology's development to be halted or prohibited. "On the contrary, the benefits are immense," he wrote. But he insisted there must be a system for intervention and boundaries within which AI operates.

His intervention comes as the debate over AI's potential risks and what the technology means for humanity has intensified in recent weeks. The bosses of leading AI firms, including Anthropic and OpenAI, have called for development to slow down and for an internationally co-ordinated approach that assesses risks and puts safeguards in place. OpenAI recently announced it would not release its latest AI model due to safety concerns.

The push for a slowdown has met resistance from President Donald Trump, who has said the US is leading the AI race ahead of China. "And, frankly, I want to keep it that way because whoever wins AI, wins," Trump said.

On Tuesday, after hosting a summit with leading AI firms such as OpenAI and Anthropic, Trump said executives had signed a "morally binding" document that would serve as a "form of protection" from AI's potential risks. Under the agreement, the companies themselves are responsible for ensuring the safety of their own technology.

Bailey's position threads between these camps. He rejects both a halt to development and an immediate turn to regulation, placing his emphasis on evaluation capacity as the first-order task.

In the UK, "important work" is already underway, Bailey said. The country has set up the AI Security Institute, which he said should help form part of a set of standards. "But the pace of progress must accelerate," the governor said, though he added: "We should proceed with a degree of humility."

Bailey acknowledged that testing will not be clean. There will be failures, and "models will behave unexpectedly." He framed those outcomes as an argument for the process rather than against it. "That is not evidence that testing has failed, rather it is evidence of why testing is necessary," he wrote.

Crucially for policymakers, Bailey did not rule out regulation outright. He said testing should not be seen as an alternative to future rules, and that a more formal regulatory framework might emerge over time. "But regulation is not, in my view, the right place to start," he concluded.

For businesses building or deploying AI in the UK, the message is that scrutiny will come through testing regimes and emerging standards before it arrives through statute — and that the Bank of England expects the pace of both to pick up.