AI bots aren’t ready to displace central bankers. Not yet, that is.
Central bankers are not born as chronic worriers, but they quickly acquire the trait. They are now spending considerable time fretting about artificial intelligence (AI): Its ability to play havoc with prices, jobs and the security of banking. As gut-wrenching as the meltdown of 2008 was, imagine if a rogue machine turbocharged a market rout.
It’s not quite a doomsday scenario where AI runs amok and destroys the Earth, said Eddie Yue of the Hong Kong Monetary Authority at a recent conference. But there are plenty of dangers emerging, he added. Yue’s counterpart in Singapore warned of the potential for fraud and cyber attacks.
American and UK officials are fearful that algorithms will be used to curtail lending to minorities. While acknowledging the benefits of rapid technological advances to the overall economy, most are wary. One thing the lords of finance shouldn’t stress about is dilution of their power.
Sure, the legions of PhD economists that staff central banks may thin. New algorithms that sift real-time data on everything from car sales to foot traffic at malls will rightly push analysts to think about how their roles will transform. But rather than make the folks who set interest rates redundant, AI could make them mightier citizens.
The Bank for International Settlements declared as much, saying that the most basic of tasks, deciding borrowing costs, will still be done by mortals. HAL, the computer that assumes divine-like qualities in the film 2001: A Space Odyssey, isn’t coming for the Federal Open Market Committee (FOMC) and its global peers. “The ways we organize ourselves and our societies are that we like to hold human beings accountable," Cecilia Skingsley, head of the Innovation Hub at the BIS, told
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