European Central Bank Decides to Keep Up with the Times and Introduce AI into Its Operations

European Central Bank (ECB) has decided to introduce generative artificial intelligence into its operations to accelerate core activities, from creating some of the most basic leaflets and summaries of banking data to writing software code and translating documents, reports the Financial Times.

This move comes as central banks cautiously explore how to leverage the latest advancements in artificial intelligence while emphasizing that there is still a long way to go before fully adopting artificial intelligence.

The ECB’s board, dubbed ‘infinity team’, has launched nine experiments in the field of generative artificial intelligence in the form of adapting existing systems that can create sophisticated text, images, and computer code, and has asked staff for ideas on where the application of AI tools could be most effective.

– From playing chess to managing drones, machines have become smarter in many areas, so why not use artificial intelligence for central banking? – stated Myriam Moufakkir, the new Chief Officer of the ECB.

Trained on large datasets of unlabeled text, generative artificial intelligence is capable of conducting human-like conversations and producing unique content. While many private sector companies have already leveraged the new technology to gain a competitive edge, central banks have been more cautious due to concerns about reliability, legal risks, and transparency.

Moufakkir stated that the ECB is ‘cautious regarding the use of artificial intelligence and the risks it entails’, adding that it ‘looks at key issues in the area of data privacy, legal constraints, and ethical considerations’. However, ECB officials say they are closely collaborating with other major central banks, such as the U.S. Fed and the Bank of England, to explore artificial intelligence.

According to FT reports, central bank officials are reportedly concerned that artificial intelligence is considered a ‘black box’.

– The black box of artificial intelligence without insight into the decision-making process has limited value. As a policy maker, I view forecasts generated by artificial intelligence models skeptically if they are not linked to a convincing explanation of the driving factors behind them – conveyed Lisa Cook, a member of the Fed’s Board of Governors.

The European Central Bank is already using artificial intelligence in several areas, including structuring real-time pricing information it tracks on thousands of products and classifying data it collects from millions of sources. These are time-consuming and relatively routine tasks that a computer can perform faster and more efficiently.

The central bank also uses natural language processing in Athena, its IT system for bank supervision, to scan vast amounts of documents, including news articles, banking documents, and supervisory assessments, so it can respond more quickly to officials’ inquiries about them.

– Supervisors can now compare these types of enriched texts within seconds, allowing them to understand relevant information faster instead of wasting time searching for it – explained Moufakkir.

The ECB is aware of the associated risks that come with new technologies but links this to changing its own operations, noting that its current goal is to embrace change and not resist something that is ultimately inevitable.