AI 2030: Three Ways AI is Shaping the Central Banking Landscape

In the past 24 months, I have engaged with many central banks and financial institutions on the implications of AI, especially generative AI (GenAI) for central banks. Some of the findings were shared at both the Americas Cash Cycle & Payments Seminar 2023 and the Chicago AI Conference 2024. Across these discussions, central banks revealed a mix of enthusiasm and caution, seeing AI as both an opportunity and a challenge.

Here are three ways AI is pushing central banks to evolve and how they can seize this moment to create a future-oriented, frictionless, and personalized financial system for all.

1. Central Banks are Challenged to Accelerate their Regulatory Responses to AI

As indicated in the BIS Annual Economic Report 2024, “the rapid and widespread adoption of AI implies that there is an urgent need for central banks to raise their game.” In closed-door discussions with financial institutions, they frequently cited regulatory uncertainty as a significant barrier to AI innovation, leading to delayed investments in AI and related technologies.

This uncertainty has not only postponed the launch of new financial products but has also resulted in financial losses and missed opportunities to enhance customer experience and improve profitability. Meanwhile, many customers are already experiencing the impact of AI-driven products introduced by financial institutions. This rapid adoption has highlighted a growing challenge for central banks: the need to effectively supervise AI financial products.

The EU AI Act, which came into force on August 1, 2024, provides a robust framework for regulating AI. However, given the unique characteristics of the financial services industry, it raises critical questions: Do financial institutions require additional, sector-specific regulations beyond the scope of the EU AI Act? Could the Act potentially "over-regulate" the financial sector, constraining innovation through excessive oversight? Furthermore, as other jurisdictions consider their approach, should they ... 

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