(Bloomberg) -- European Central Bank Executive Board member Piero Cipollone said artificial intelligence can be helpful for central banks but its use must be monitored and properly supervised.

“AI offers opportunities for innovation and efficiency gains, from economic analysis to communication,” Cipollone said Thursday. “But there are also risks that must be considered, and we are duly building appropriate safeguards.”

AI has been attracting interest among monetary policymakers because of its potential to disrupt the global economy like few innovations have. For central bankers, it’s also interesting due to its ability to rapidly analyse the kind of extensive data sets that are used to determine the state of the economy. 

“As we integrate AI into our processes, we must ensure that human judgment and critical thinking remain at the forefront,” Cipollone told an event in Rome. “This balance will be essential to maintaining trust in our data, our decisions and the broader financial system.”

Cipollone also said:

  • “AI could affect cost pressures in the economy in both directions”
    • “If the net effect of AI is that it substitutes labor and increases productivity, we could see a reduced risk of labor shortages and downward pressure on unit labor cost growth”
    • “The uptake of AI will also have an impact on global energy demand, with the computational power required for sustaining AI’s rise doubling every 100 days” — “This could push up energy costs”
  • “AI is likely to create new winners and losers in the labor and capital market, with consequences for income and wealth distribution.”
    • “This matters for monetary policy because it can influence people’s marginal propensity to consume and their access to credit, which in turn affect how demand responds to changes in monetary policy”
    • “Moreover, if AI leads to a change in financial structures, such as an increase in non-bank intermediation it may have further implications for monetary-policy transmission”
  • Click here to read full speech
  • NOTE: AI Is Challenge for Central Banks to Raise Their Game, BIS Says

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