Central banks must prepare for profound impact of AI, BIS says
In its first major report into the rapidly advancing world of AI, the central banking umbrella group said policymakers need to harness its immense power to monitor data in real time in order to «sharpen» their inflation-predicting abilities.
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Offering CollegeCourseWebsiteIndian School of BusinessProfessional Certificate in Product ManagementVisitIIT DelhiCertificate Programme in Data Science & Machine LearningVisitMIT xPROMIT Technology Leadership and InnovationVisit That was something found badly wanting in the wake of COVID-19 and Russia's invasion of Ukraine when the US Federal Reserve, ECB and other major central banks all failed to grasp the strength of the global inflation surge.
New AI models should reduce the risk of a repeat although their untested nature and the fact they can «hallucinate» mean they should not become robo-ratesetters, Cecilia Skingsley, a top official at the BIS, said.
«We like to hold humans accountable,» the former Swedish central banker said, referring to the crucial role borrowing costs play in society and the need for judgment.
«So I can't really see a future where an AI will be setting (interest) rates.»
The BIS, often dubbed the central bankers' central bank because of the joint work it does, already has eight projects involving AI.
Hyun Song Shin, its head of research and top economic adviser, said policymakers should not view it as «something magical» but did say it can help find needles in haystacks and spot
