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Artificial intelligence (AI) could revolutionise market infrastructures and payments, a senior official at the European Central Bank (ECB) has said, as regulators across the globe begin to intensify their focus on the phenomenon.
In a keynote address at the National Conference of Statistics, Piero Cipollone, a member of the ECB Executive Board, spoke about the transformative potential of AI and its impact on central banking, payments and market infrastructure.
He said the technology has the potential to enable customised services, foster financial inclusion, and enhance oversight and early warning systems for financial stability.
Cipollone highlighted the significant strides AI has made in recent years, noting its transition from analytical models designed for specific tasks to more sophisticated generative AI capable of creating human-like content.
He also emphasised the growing adoption of AI, with nearly three-quarters of organisations integrating the technology into their business functions, although only a small fraction have fully realised its potential across multiple areas.
Impact on payments
In his speech, Cipollone stressed the significant impact that AI could have on payments and market infrastructure.
"AI might bring about innovative payment services tailored to consumer preferences," he stated.
This includes developing systems that facilitate voice-activated payments, which could significantly enhance financial inclusion.
He also pointed out AI’s potential to bolster the oversight of payment systems.
"There is an opportunity to use AI in early warning models to identify financial stability risks before they materialise," Cipollone noted, suggesting that AI could aid in monitoring and ensuring compliance within financial markets.
Continued uncertainty and risk
Despite AI’s potential, Cipollone acknowledged the uncertainty surrounding its impact on productivity.
Drawing a parallel with the historical "Solow paradox", where the widespread adoption of computers did not immediately lead to measurable productivity gains, he questioned whether AI might face a similar challenge.
"The transformative potential of AI may not always be productivity-enhancing," he cautioned, referencing the mixed impacts seen in previous technological revolutions.
Cipollone also underscored the importance of implementing robust safeguards to mitigate the risks associated with AI.
He warned against the dangers of deep fakes and other malicious uses of AI, emphasising the need for strict confidentiality and privacy measures, especially in the sensitive realm of central banking.
"AI does not have the capacity for self-reflection," he said, adding that human oversight is vital to maintain accountability and public trust.
Cipollone also highlighted the risk of over-reliance on AI, which could lead to an "echo chamber" effect, where AI-driven decisions become self-referential and are potentially biased.
"As AI becomes more integrated into our processes, preserving human judgement and critical thinking is crucial," he asserted, noting the need for diverse perspectives in decision-making.
Cipollone concluded by calling for a balanced approach to AI adoption.
"For AI to produce its full effects, the right ecosystem must be in place, one that promotes competition, ensures fair distribution of gains, establishes ethical safeguards, and fosters the necessary skills in the workforce."
