In a recent International Banker article, journalist Cary Springfield analyzed recent publications from the Bank for International Settlements (BIS) to explore the potential impact of AI on central banking.
The BIS's latest Annual Economic Report, published in June 2024, stated, "AI will affect financial systems as well as productivity, consumption, investment and labour markets, which themselves have direct effects on price and financial stability." Central banks must both anticipate AI's economic impact and integrate AI tools into their operations, the BIS wrote.
The BIS has also identified machine learning techniques like decision trees, random forests, and neural networks as potentially valuable for data collection, economic forecasting, payment oversight, and financial supervision. "Central banking is particularly well suited for the application of machine learning techniques given the availability of structured and unstructured data as well as the need for rigorous analysis in support of policy," BIS economists wrote in a January 2024 paper. "The synergies between machine learning and core central banking disciplines such as economics, statistics and econometrics are likely to place central banks at the vanguard of advances in AI."
However, the BIS has also warned of the risks presented by AI, including data security breaches, AI hallucinations, and reputational damage. A January 2025 report entitled "Governance of AI Adoption in Central Banks" urged central banks to adopt a "comprehensive risk management strategy" to balance innovation with good governance.
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