Artificial Intelligence in Economic and Financial Policy Making

AI has emerged as a transformative technology across a spectrum of activities with potential to lead to significant changes in economic structure and financial systems. Being a general-purpose technology with a potential for rapid innovation across a broad array of economic processes, AI calls for careful management and proactive policies. Governments have three roles to play in AI development: AI enablement (R&D, education, infrastructure, and financing); the use of AI in government itself; and the enactment of laws and regulations for the private sector, ensuring that the use of AI technologies facilitates governments’ objectives of economic growth, stability, equity and well-being. The speed of innovation and adoption of AI, its subsequent impact on the economy, labor markets, finance, and sustainability is unknown, but could be rapid. Policymakers should remain vigilant to AI developments and be prepared to adapt policy flexibly. AI already poses several urgent questions for policymakers. These include whether scaling laws will continue to hold and how that might impact concentration of market power; the trade-offs between proprietary and open-source systems; the availability of data for AI training; and the sustainability of AI business models due to the high associated capital and energy costs. Regulatory authorities should remain vigilant about market developments, as excessive concentration could reduce innovation and slow the spread of productivity gains. Opinions on the best approach to the technology diverge. G7 governments and central banks will likely prefer different approaches to AI, depending on culture, legal systems, national priorities, perception of risk and specific needs.

This SUERF BAFFI Bocconi e-lecture presents key findings from a report by a High-Level Panel of Experts on Artificial Intelligence (AI). The panel was established by the mandate of the Finance Ministers and Central Bank Governors of the G7, with the objective of exploring the implications of AI for the economy and the financial sector. Two top experts discuss and supplement the report’s findings. There will be the opportunity for participants to actively join the conversation in a Q&A session.