According to the Bank for International Settlements (BIS), central banks should use artificial intelligence (AI), but it has stressed that when it comes to determining interest rates, individuals should still have the final say.
The Bank for International Settlements (BIS) has stated that central banks should embrace artificial intelligence (AI), but it has emphasized that technology should not take the place of people when it comes to setting interest rates. The central banking umbrella body stated in its first significant study on the quickly developing field of artificial intelligence that policymakers must use AI’s enormous potential to analyze data in real time and “sharpen” their inflation-predicting skills.
After COVID-19 and Russia’s invasion of Ukraine, the U.S. Federal Reserve, the European Central Bank, and other major central banks all failed to recognize the severity of the worldwide inflation rise, and that was something that was discovered to be seriously lacking. Top BIS official Cecilia Skingsley stated that while new AI models should lower the likelihood of repetition, they shouldn’t be used as robo-rate setters due to their unproven nature and propensity for “hallucturing.”
The former Swedish central banker stated, “We like to hold humans accountable,” alluding to the judgment required and the critical role borrowing prices play in society. “So I can’t really see a future where an AI will be setting interest rates.” Because of its collaborative efforts, the BIS is frequently referred to as the central bankers’ central bank. It now oversees eight AI-related initiatives. Its chief research officer and senior economic advisor, Hyun Song Shin, advised policymakers not to see it as “something magical,” but acknowledged that it can be useful in identifying financial system risks and locating needles in haystacks.
Additionally, labor markets will probably be drastically altered by technology, which will have an effect on GDP growth and productivity. If widely used, businesses may be able to react to macroeconomic shifts by adjusting pricing more quickly, which could have an impact on inflation. The BIS issued a warning, pointing out that AI may exacerbate already-existing risks like herding, bank runs, and fire sales of financial assets, in addition to introducing new ones like new kinds of cyberattacks.
“The call for action for central banks is to foster a community of practice,” Shin stated. “To share experience, to share best practices, but also to share data and the models themselves.”
Do Follow: CIO News LinkedIn Account | CIO News Facebook | CIO News Youtube | CIO News Twitter
About us:
CIO News is the premier platform dedicated to delivering the latest news, updates, and insights from the CIO industry. As a trusted source in the technology and IT sector, we provide a comprehensive resource for executives and professionals seeking to stay informed and ahead of the curve. With a focus on cutting-edge developments and trends, CIO News serves as your go-to destination for staying abreast of the rapidly evolving landscape of technology and IT. Founded in June 2020, CIO News has rapidly evolved with ambitious growth plans to expand globally, targeting markets in the Middle East & Africa, ASEAN, USA, and the UK.
CIO News is a proprietary of Mercadeo Multiventures Pvt Ltd.
