Bank of England warns AI poses risk to financial stability as top researcher calls current systems 'not smart'

The Bank of England has warned that the UK financial system faces increased risk from artificial intelligence, even as one of the world’s leading AI researchers argues that current systems are fundamentally unintelligent. Yann LeCun, who worked as chief AI scientist at Facebook-owner Meta for a decade before leaving in 2025, founded Advanced Machine Intelligence Labs (AMI Labs) in Paris earlier this year. His goal is to move AI beyond systems like ChatGPT, Claude and Gemini, which he says will never be able to tackle complicated situations in the real world, such as getting a robot to do household chores. “They’re not a path towards human level or human-like intelligence, or even animal-like intelligence, because they cannot deal with real world data, they just are not built for that,” LeCun said on the sidelines of VivaTech, France’s leading technology conference. He argues that large language models (LLMs) are extremely good at well-defined problems like coding and generating text, but lack genuine understanding. “They basically just accumulate knowledge… They can regurgitate something, you train them to regurgitate, but they’re not particularly smart. They don’t have an underlying understanding,” he said. LLMs struggle with unpredictable real-world physics. To illustrate, LeCun holds a pen upright on its tip. A toddler would know it will topple if released, but no human could predict which direction it falls. An LLM would generate a statistically plausible but almost certainly wrong answer because it does not reason about physical reality. AMI Labs is developing a system called Joint Embedding Predictive Architecture (JEPA), which creates abstractions of the real world to assess the outcomes of actions. The company announced earlier this year that it had raised more than $1bn (£760m) in seed funding from investors including US computer chip giant Nvidia and the fund that manages the private wealth of Amazon-founder Jeff Bezos — one of the largest seed rounds of its kind in Europe. The Bank of England’s warning, meanwhile, underscores that despite such limitations, the deployment of AI in financial systems still poses stability risks that regulators are monitoring closely.