Central banks and other supervisory and regulatory authorities need to “raise their game” both as observers of the effects of artificial intelligence on the economy and as users of the technology, according to a new report by the Bank for International Settlements.
The report pointed to the rapid and widespread adoption of AI by households and businesses. The speed at which the technology is being deployed means central banks need to stay ahead of the effects of AI on economic activity through its effects on aggregate supply and demand, according to the authors. Central banks can also benefit from using the technology in shaping policy, such as in data collection.
“However, to harness the benefits of AI, central banks and other authorities need to address various challenges and important trade-offs,” the report concluded. “These involve the trade-off between using external versus internal AI models, as well as in collecting and providing in-house data versus purchasing them from external providers. Together with the centrality of data, the rise of AI will require a rethink of central banks’ traditional roles as compilers, users and providers of data.”
